n the emerging marets‰ policy rates nticipation o a ‹„ interest rate hie ept yields on ‹„ and ‹– 10Žyear government diverged… bonds about 1… ppt above the erman and •apanese e«uivalents †¥igure 3‡… The ‹„ too a irst step to monetary policy normalisation in 201‰ but interest rates in the advanced economies remain historically low †see ¦ox“ ”ow interest rates orever¬‡… Even so‰ inlation in the ‹„‰ the Euro area and the ‹– dropped close to §ero last year‰ based largely on low commodity prices… n the ‹„‰ core inlation‰ which excludes ood and energy‰ was essentially unchanged at 1…ˆ… nlation in •apan ell below 1ˆ ater rising to 2…¡ˆ in 201’ due to the sales tax increase in pril 201’… —risisŽhit ¦ra§il and ˜ussia increased policy rates in an attempt to counter capital outlows and inlation… n contrast‰ —hina and ndia both reduced their policy rates… t was a mixed year or stocs in the „toc maret perormance in advanced marets was mixed… The „™€ 00 in the ‹„ advanced marets… was down 0…ƒˆ‰ and the ‚„— ‹– index was down …¡ˆ… ¦y contrast‰ the •apanese Niei 22 was up ¡…1ˆ and the erman ® 30 by ¡…6ˆ †¥igure ’‡… The mixed perormance relects the diverging paths o monetary policy… ter three consecutive years o ending in positive territory‰ the world’s maŠor e«uity marets slowed due to increased uncertainty‰ wea proit growth and investor caution… Figure 4 10 „toc maret perormance‰ 201’–2016 †ecember 201’ ¯ 100‡ 1ƒ0 110 100 90 Ž0 70 an ƒ01‡„e… ƒ01‡Mar ƒ01‡€r ƒ01‡Ma ƒ01‡‹n ƒ01‡‹Œ ƒ01‡‹g ƒ01‡Se€ ƒ01‡Š†t ƒ01‡‚ˆ‰ ƒ01‡e† ƒ01‡an ƒ015„e… ƒ015Mar ƒ015€r ƒ015Ma ƒ015‹n ƒ015‹Œ ƒ015‹g ƒ015Se€ ƒ015Š†t ƒ015‚ˆ‰ ƒ015e† ƒ015an ƒ01 „e… ƒ01 Mar ƒ01 €r ƒ01 Ma ƒ01 US (S&P 500): –0.7% a€an (‚ikkei ƒƒ5): 9.1% MSCI UK: –5.9% erman ( 0): 9. % MSCI Emerging Markets: –17% Note“ percent values indicate yearŽonŽyear change o respective indices in 201… „ource“ atastream… Emerging maret stoc indices ell „toc marets in the emerging marets suered substantial losses driven by alling substantially… commodity prices‰ heightened political instability in many regions and uncertainty around ‹„ monetary policy… The ‚„— Emerging ‚arets index ell by 1ƒˆ in 201‰ but recovered partially in the irst «uarter o 2016… Swiss Re sigma No 3/2016
World Insurance in 2015 Page 9 Page 11