China's CSI 300 emerges as the index of the year

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The Independent Online

China's benchmark CSI 300 index has emerged victorious out of the sub-prime shadow cast over the world's money markets, coming out on top of the list of the year's best-performing indices.

The CSI 300, which tracks the daily price performance of the top 300 companies on the Shanghai and the Shenzhen stock exchanges, gained more than 161 per cent in the past 12 months. The Hang Seng China Enterprise Index, which was launched in 1994 as a benchmark for the stock price performance of China-incorporated companies listed in Hong Kong, also had a good year and came in eighth in the list of the 10 best performers, gaining more than 54 per cent in 2007.

A number of markets are now closed until the new year, including Shanghai and Tokyo. Hong Kong and New York are open on Monday, while the UK stock exchange is open for a half-day session.

Japan's Nikkei 225 stock average, which tracks the top 225 companies listed in the first section of the Tokyo stock exchange, finished the year as one of the worst-performing indices in the world, losing just over 11 per cent in the past 12 months.

"The market ended as if to symbolise the year's trade sub-prime," said Hitoshi Yamamoto, the chief executive of Fortis Asset Management Japan. "This looks like a warning by the market that the sub-prime problem will continue into the new year and won't be solved easily."

Cameron Umetsu, the head of economic research at Nomura in London, expects the Nikkei to rebound eventually, as the US economy recovers towards the end of 2008. But he said: "It has been vulnerable because of its exposure to America as there are a number of blue-chip exporters who have suffered. At the same time, the Nikkei has been marked by the conspicuous lack of domestic investor demand, which might have shielded it."

Mr Umetsu added: "A large portion of retail investors in Japan are quite mature and have seen the market in the late Eighties and the early Nineties. As a result, taking a long-term view, the Nikkei has not been seen as the best investment option by them. As for China, even though the market looks bubbly, with the Fed easing, we think it will continue to do well in the short term."

The Nikkei average was joined by the ISEQ Overall Index from the Irish stock exchange, which lost 26.26 per cent, and the IBC Index from the Caracas stock exchange in Venezuela, which took the prize for the year's worst performance, losing more than 27 per cent, at the bottom end of the table.

Estonia's OMX Tallinn index, which lost more than 13 per cent, and the Sri Lankan stock market Colombo all share index, which fell by almost 7 per cent during the past 12 months, also featured in the list of 2007's biggest losers.