Bitcoin, bonds or equities? Best and worst performing assets of 2017

The riskiest assets have performed well, while securities seen as the safest and least volatile have trailed behind

The value of bitcoin soared by almost 1,500 per cent in 2017 (Reuters)

It was a great year to hold bitcoin, but a bad time to have invested in the Uzbek soum.

As 2017 winds to a close, a look at the winners and losers around the globe shows that, broadly speaking, the riskiest assets performed well – with bullish sentiment on display in stocks, emerging-market sovereigns and corporate debt.

Securities generally seen as the safest and least volatile bets – think Japanese government bonds – trailed behind.

There was perhaps no investing idea that attracted more attention in 2017 than cryprocurrencies, from Jamie Dimon’s dismissal of bitcoin to Katy Perry quizzing Warren Buffett about the subject.

Bitcoin soared almost 1,500 per cent while smaller counterparts such as ethereum and litecoin gained at least 6,000 per cent. Of course, the surges were accompanied by no shortage of pessimists predicting a bubble.

Here’s our wrap-up of the best and worst performers in various asset classes over the past year:

Equities

Bulls (investors) in Ukraine had a good year after the International Monetary Fund said in May that it sees “welcome signs of recovery” for the economy and “a promising basis for further growth”. Ukraine's recovery was part of a broader rally in emerging markets as investors flocked to developing nations in hopes of higher returns.

It wasn’t a good year, however, to have bet on stocks in Qatar and Pakistan. The Persian Gulf country was thrown into chaos mid-year when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties. In Pakistan, the index was coming from a high base but also suffered from foreigners pulling money out of the market. (We excluded Venezuelan this year because any stock exchange gains are almost entirely due to the effect of a rapidly devaluing currency.)

Bonds

The three-decade bull run for fixed income rolled on in 2017, defying yet again predictions that faster inflation and tighter monetary policy would bring it to an end. The bond world’s best performers were yesteryear’s losers, with Greece and Argentina among the standouts.

It took effort to lose money on bonds this year – the Japanese central bank’s stitch-up of its government-debt market and Venezuela’s economic collapse made those two the worst performers in the developed and emerging categories, respectively.

Tiny Belize earned top marks in the emerging government-debt category after an upgrade from Moody’s Investors Service in April.

Turning to the corporate-debt world, US high-yield securities saw a wide dispersion of results – from high-flying food-and-beverage retail and transport companies, to trauma for holders of bonds sold by commercial printer Cenveo Corp.

In the emerging-market corporate debt category, an Indonesian energy company topped the list, while securities tied to Brazilian construction giant Odebrecht SA – which is embroiled in a corruption scandal that stretches across South America –proved to be ones to avoid.

Commodities

Palladium, which is typically used in pollution-control devices for gasoline vehicles, led gains in precious metals this year by climbing more than 50 per cent as investors bet on increased usage in vehicles. Copper and aluminium bulls also had a great year. Those gains were largely tied to better economic prospects across the globe, which would mean higher usage of industrial metals.

On the down side, sugar and natural gas had a bad year. The sweetener has been falling because of concerns about a global surplus, while natural gas recently hit a 10-month low following two warm winters that left stockpiles at high levels.

Currencies

The biggest gainer in the currency space is a bit on the obscure side: the Mozambique new metical. The East African country has struggled to control inflation following a debt crisis, but the central bank has said it wants to achieve a lower and more stable rate.

On the down side, the Uzbek soum tumbled after the gold-rich republic removed the currency’s peg to the dollar.

Bloomberg