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Stocks Up 17.7% in FY04

The Australian financial year has just ended with the Australian stock market index (All Ordinaries price index) up 17.7% for the year ended 30 June 2004. This follows two negative years of minus 7.6% in FY02 and minus 5.2% in FY03. However compared to 53 countries' stock markets as calculated by MSCI (http://www.msci.com/equity/index2.html) the Australian result doesn't rank that highly - at the lower quartile of all countries to be precise - but it was 1% ahead of the good old USA. Top return was 79.2% for Egypt and the upper quartile result was 40.9% for the Czech Republic.

Countries have different financial years. This raises the question as to whether financial year end dates effect stock markets. We looked at the history of the Australian stock market back to 1875 as stored on FinDem. The median result for 30 June years was 7.0% while the median result for all 12 month periods on month-end was 6.0%. The range between 5th percentile and 95th percentile was 44.4% for 30 June years and 51.3% for all 12 month periods. From these statistics it looks like 30 June years are a bit less volatile.

We have added a list of 233 countries' financial years to the Lists in FinDem's Resources section (http://www.findem.com.au/resources/resourcesarchivel.php). Most popular financial year end is 31 December used in 161 countries. Second most popular end date is 31 March in 33 countries. The 30 June date adopted for Australia is used in 22 countries. Twelve countries have 30 September (including USA) and one country (Samoa) has 31 May. Four countries (Nepal, Afghanistan, Iran, Ethiopia) have non month-end date financial years, which may well have some religious significance. FinDem could not find any history to explain the origins of financial years. It would appear from the pattern of countries that 31 March is associated with the British Empire and 30 June with outlying colonial sections and later editions to the British Empire. Perhaps because they received financing from mother England in their early periods, the 30 June countries did their accounts after home office did them (in the same way as Australian State governments hand down their budgets after the Federal budget has been handed down). Let us know if you have found some more detiled explanations

Posted Saturday, 3 July 2004

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