The chart below measures the year-to-date performance of the stock markets of two dozen countries. We have used iShares indexes for the underlying data, because they not just tracking indexes, but investable. (Notes: The U.S. market is represented by the iShares S&P 1500 index, while some of the other funds are tend to focus more exclusively on larger-cap issues. The average has been calculated on a price-weighted basis.)

As you know, it’s quite a year we’re having — if “having” means having a terrible year and “we” includes (a) almost any investor in (b) any asset class other than fixed-income (c) anywhere on the planet… except (d) John Paulson. (This credit bulletin issued by Southwest Next describes the situation nicely, as does this SNL commercial parody of Reliable Investments.)

Several things are clear from the year-to-date numbers. Not surprisingly, most of the emerging markets have demonstrated below-average performance on the basis of their lower aggregate cash flows, smaller natural-resource and commodity bases, more volatile corporate-earnings expectations, etc.

Of the former “tigers,” only Taiwan and Singapore rank above-average performance this year — even though most of these markets were less susceptible to the direct effects of the global real-estate meltdown. From that angle, the most surprising take away may be that Spain, which has been pummeled by the same kind of loose mortgage-underwriting standards as the U.S. and the U.K., has not been weaker year-to-date. (Note that none of these figures have been risk-adjusted. That may be our next self-assignment.)

If you are surprised to see how well the U.S. ranks on a relative basis, keep in mind that these are dollar-denominated funds. So the returns experienced by non-U.S. investors would include foreign-exchange weakness not (necessarily) captured in such a USD-referenced analysis. (The USD Index [$DXY] is up 3.4% YTD.) Conversely, a U.S. investor tracking foreign exchanges in local currencies may be relatively less happy with the performance of her home market than implied by the chart. (It is only the pure dollar-based player — that is, most individual investors and institutions operating in this country — who perceives the home market a much better place to be than, say, Switzerland as of late.)

Of course, all of these markets are feeling the effects of the loose monetary policies, loose lending policies, over-securitization, and free infrastructure and development spending that characterized the early and middle years of this decade. That said, we wonder if China, Hong Kong and Korea are really worth about 40% less than they were nine months ago. Nothing is more susceptible to changing risk expectations than a high-growth story. At some point the underperforming markets of Southeast Asia will be too cheap for all but the most skittish of quick-flip traders, if they aren’t already. ♦