Despite the pandemic, 2021 was a good year for the majority of stock markets we report on in the Bulletin. 

All but one of the markets we cover gained ground in December, and all but two made gains in the calendar year, with three markets up by more than twenty per cent. 

As we did in December last year, we have added an extra section to the Bulletin, covering stock market performance over the last twelve months. First though, the news from December, a month when there were more diplomatic spats between the major powers. 

Tensions continued to rise over the Russian troops stationed on Ukraine’s borders and worries persisted about the supply of Russian gas to Europe. The UK and US, announced that they would not be sending diplomats to the Winter Olympics in Beijing. Vladimir Putin said he definitely would be going, while French President Emmanuel Macron, dismissed any boycott as insignificant.

Perhaps of greater long-term significance, was the suggestion that China, might soon have its first naval base on the Atlantic coast, courtesy of a deep water port in Equatorial Guinea. 

In the UK, the Government suffered a defeat in the North Shropshire by-election, and lost its chief EU negotiator when Lord Frost resigned. Retail finally recovered to pre-pandemic levels, but, almost inevitably, it was online sales that were responsible. 


As we have mentioned above, the Government lost the North Shropshire by-election, a seat it had previously held for two hundred years. 

Several factors may have contributed to this defeat, such as reports of parties at Downing Street and Whitehall that breached Covid rules, as well as wider concerns over the economy and inflation. 

We have written below, about increasing energy prices and worries about inflation in the US and Germany. In the UK, the Bank of England suggested that inflation might reach five per cent next year. Exactly a week later, figures for November showed that inflation had hit 5.1 per cent, as newspaper headlines suggested that rising costs, could see the average family spending £1,700 more next year. 

The Bank of England responded to the inflationary pressure, by raising interest rates to 0.25 per cent, and, as in many countries, further rises look likely next year. This came as figures showed, the UK economy grew by just 0.1 per cent in October, with most experts having forecast 0.4 per cent, and growth for the third quarter, revised down to 1.1 per cent from the previous 1.3 per cent. 

The UK, signed the long-anticipated free trade deal with Australia, job vacancies reached another record high, as the unemployment rate fell to 4.2 per cent and, in a tale of British success, Doc Martens more than weathered the pandemic storm. They sold 6.3 million pairs of boots and shoes around the world in the last year, and posted a £61million profit. 

The UK is storming ahead of Europe in tech investments. Of the three hundred and twenty-one unicorns in Europe, (a unicorn being a privately held start-up company, valued at over $1billion), over a hundred are in the UK, with Germany and France having just fifty-one and thirty-one respectively. Chancellor Rishi Sunak, is apparently gearing up to slash both income tax and VAT before the next election, and the Government’s borrowing was down in November. The figure of £17.4 billion, was lower than last November, but it was more than had been forecast by economists and, in truth, bad news was never far away in December. Figures for November, showed that car production had fallen by nearly twenty-nine per cent, marking the fifth consecutive month of decline. 

However, the major worry for UK householders, was the forecast of rising fuel bills, with even some of the more conservative suggestions, indicating a rise of up to fifty per cent next year.

What of the national high street? As we mentioned in the introduction, UK spending is now back to pre-pandemic levels, but inevitably this has been thanks to Brits returning to online shopping, as lockdowns and advice to work from home continued. London offices were reported to be at ten per cent occupancy in the run-up to Christmas. 

Elsewhere, the closures continued. Four hundred pubs were reported to have closed in 2021 and TSB confirmed it is set to shut seventy branches in July. By and large, fears over the virus meant that shoppers avoided town centres, both before and after Christmas, and the latest reports from the hospitality sector, suggest that fifty per cent of the Christmas trade was lost. 

December was, however, a good month for the FTSE-100 index of leading shares, which rose five per cent to end the year at 7,385. The pound ended the year trading at $1.3532, up two per cent against the dollar in December, but down one per cent for the year as a whole. 


A new coalition government, was eventually agreed following September’s elections in Germany, and December saw Olaf Scholz, the leader of the Social Democrats, sworn in as Chancellor. The centre-left Social Democrats will govern alongside both the Greens, whose leader Annalena Baerbock will become Foreign Minister, and the pro-business Free Democrats. 

The new government plans to borrow significant amounts, to fund its plans for the digitisation and de-carbonisation of the German economy. It will be interesting to see what impact this has on German inflation, which reached 5.2 per cent in November, the highest level since June 1992. 

Away from the new government in Germany, December in Europe was a tale of oft-repeated themes. Several countries tightened restrictions, as the Omicron variant spread across the continent. Holland was just one example. Prime Minister Mark Rutte called the measures unavoidable, as he ordered non-essential shops, gyms, bars, hairdressers and other public venues to close until January 14th. 

The arguments over gas rumbled on as well. The EU claimed to be reconsidering its position on long-term gas contracts with Russia, but The Kremlin said any crisis in gas supply was of Europe’s making. A few days before Christmas, European gas prices climbed to record highs, as flows on the Yamal-Europe pipeline started flowing back towards Russia. 

We have mentioned China’s belt and road initiative many times in this Bulletin. December saw similar moves from the EU, which revealed details of a €300 billion global investment plan, described by Commission President Ursula von der Leyen, as a true alternative to China’s approach. 

So, were Europe’s stock markets marching in step with the global investment plan in December? Or shivering in the cold as the gas flowed back to Russia? Very much the

former, Germany’s DAX index was up five per cent to 15,885, while the French stock market went one better, rising six per cent to end the month at 7,153. 


December started positively in the US. Speaking at the beginning of the month, President Biden said, the US economy was in strong shape ahead of the holiday season. He declared that policies to free up supply chain blockages were working, and predicted that price rises would soon start to ease. 

The luck seemed to run out the very next day, when it was revealed that the US economy added only 210,000 jobs in November, way below economists’ expectations of 550,000, although this still saw the unemployment rate fall to 4.2 per cent. 

By the middle of the month, the President’s optimism looked even wider off the mark, as figures for November showed inflation rising to 6.8 per cent, the highest level for almost forty years. With the shipping logjam reportedly getting worse, not better, and truck orders at their lowest level for twenty-six years, the supply chain problems looked set to continue. 

The other problem which the US, like all major economies, will need to deal with in the coming year, is inflation. With the Biden administration committed to pumping billions into infrastructure projects, could it rise even higher than the figure recorded for November? 

Chairman of the Federal Reserve, Jerome Powell, admitted that the Omicron variant had added a new level of uncertainty around inflation. By the middle of the month, the Federal Reserve had decided to cut back its economic stimulus package, more quickly than previously planned. The consensus now, seems to be that there will be two or three increases in interest rates next year, as the central bank looks to keep inflation under control. 

In company news, Tesla moved its headquarters from California to Texas, and reportedly Tesla boss Elon Musk, will be paying over $11 billion in tax this year. 

Meanwhile, Apple was rumoured to be less future ready than competitors, Google and Amazon, and struggling to catch up in the future readiness league table. A study for the Institute of Management Development put Tesla, Google, Mastercard and clothing company Lululemon at the top of their rankings. 

Apple were listed in the laggards, along with Audi, HSBC, Twitter and IBM. Presumably, the rankings were calculated before it was revealed, that Tesla was to recall 475,000 vehicles for safety reasons, virtually equivalent to the 500,000 vehicles it delivered last year. 

Whatever the worries about inflation and disappointing jobs numbers, US stock markets were in buoyant mood in the final month of 2021. The Dow Jones index rose five per cent to 36,338, while the more broadly based S&P 500 index was up four per cent to 4,766. 

China and Far East

December, was another month in which the Chinese Communist Party flexed its muscles. We have written previously, about Xi Jinping’s so-called policy of common prosperity. More and more, this seems to be about penalising companies and individuals who have either been successful, or have butted up against the authority of Beijing, or both. 

December saw China’s top internet live streamer, Huang Wei, fined 1.34 billion yuan, around £160 million, for tax evasion. This was part of a general crackdown on celebrities and social media personalities, who were threatened with severe penalties, should they not clear any outstanding tax by the end of the calendar year. 

Even footballers did not escape the party’s disapproval, not for tax but for tattoos. The month ended with them being told to remove or cover up any tattoos for the good of society. 

A rather more serious penalty was suffered by DiDi, China’s leading ride-hailing app. The company made its debut on the New York stock market earlier this year, only for the Government, to almost immediately order online stores to stop offering the company’s app, in another example of Beijing’s clampdown on China’s technology sector. The company recently announced, that it will move its share listing from New York to Hong Kong, as it reported a loss of $6.3 billion, for the first nine months of the year, with revenues in China down five per cent in the third quarter. 

How long will it be until TikTok gets the same treatment? The company leapt from seventh place in 2020 to become the internet’s most visited site in 2021, replacing Google in the number one spot. Facebook was third, followed by Microsoft, Apple and Amazon. 

There was some worrying news for the wider Chinese economy, with the most recent figures for industrial production, retail sales and the rate of unemployment, all failing to match analysts’ forecasts. Car sales were down, for the seventh month in a row, and China’s central bank responded to the poor figures by cutting the RRR, the Reserve Requirement Ratio. Simply put, that is the amount of reserves banks must hold. The cut released some 1.2 trillion yuan, or £139 billion, into the economy in a bid to stimulate growth in the coming year. 

We have written previously, of the problems of the Chinese property sector in general and Evergrande in particular. The company limped on through December, with some pundits saying its default is only a matter of time, while others insist that the government will have to step in. Although Evergrande is making all the headlines, there are several other Chinese property companies with similar liquidity problems. 

In Japan, Toyota reacted to one of the perennial themes of 2021, problems in the global supply chain, by announcing that it will extend production stoppages at some factories in Japan. Land Cruiser and Lexus production was hit by the delays, with the company estimating that fourteen thousand vehicles were lost.

The first patriots only elections, were held for the Hong Kong legislature, and voter turnout fell to a record low. The month ended, with the pro-democracy website Stand News being forced to close, following a police raid and the arrest of six editors and former editors. With 

universities being forced to remove memorials to the victims of the Tiananmen Square massacre, 2022 does not promise to be a happy year for pro-democracy activists in Hong Kong. 

What of the region’s stock markets? South Korea led the way in December, rising five per cent to close the month at 2,978. Japan’s Nikkei Dow index rose three per cent to 28,792 and China’s Shanghai Composite index was up two per cent at 3,640. The Hong Kong stock market has had a poor year, and was unchanged in percentage terms in December, ending the month at 23,398. 

Emerging Markets 

As we have written in previous Bulletins, this year saw El Salvador, become the first country to accept Bitcoin as legal tender. In December, another country took a step in that direction, as Colombia’s biggest bank started offering customers trading in the cryptocurrency. The Colombian government, has launched a one-year programme to bring cryptocurrency services to customers in a more straightforward manner. 

There are suggestions that the White House, will push for Russia to be removed from SWIFT if it invades Ukraine. SWIFT is the global interbank payments system, which facilitates trade between countries. At first glance, this would seem to be a punitive sanction, but there have been suggestions for some time, that Russia, China and India have been discussing their own alternative to SWIFT, with some sources suggesting the move could come before the end of 2022. The Biden Administration, may need to consider the Law of Unintended Consequences, especially with Vladimir Putin naming China as Russia’s first choice as partner, in an end of year press conference. 

December, was a good month for the Brazilian stock market, although it was small consolation at the end of a disappointing year. The market rose three per cent to close the month at 104,822. The Indian stock market was up too, rising by two per cent to finish at 58,254. The Moscow stock market went in the other direction, however, falling back three per cent in December to close at 3,787.