Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

BRIC Emerging Stock Markets Relative Performance Analysis

Stock-Markets / Emerging Markets Feb 02, 2009 - 05:37 PM GMT

By: Richard_Shaw

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleEmerging countries have been increasingly important to developed economies.  How are their stock markets doing lately?

Let's look at the BRIC countries (Brazil, Russia, India and China) over the past year through their indices.


China and India are at about the same level of 1-year performance at approximately -47% and -41% respectively.

Brazil is behind China and India at approximately -53%, and Russia is the laggard at approximately -71%.

The S&P 500 index is down approximately 37% over the same period.

BRIC Indices vs S&P 500 Index (1-year weekly)

The stock charts below show the index in candlestick format, with price performance relative to the S&P 500 index immediately below, and absolute price performance in the bottom frame.

Brazil (MSCI Brazil Index)

Russia (Russian Trading System)

India (Bombay SENSEX)

China (Xinhua 25)

Some of the Investable proxies for the four indices include:

  • Brazil: EWZ
  • Russia: RSX
  • India: IFN
  • China: FXI

The Barclay's ETN (INP) was once a good vehicle for India, but due to the credit quality problems with banks, including Barclay's, we caution against investing through any ETN (single issuer debt instruments) during this troubled economic period.

While Russia provided outstanding recent past returns, we are biased against investing there at this time due to apparent integrity problems in dealing with foreign capital — particularly the effective expropriation of oil company interests.  We are also concerned about its handling of gas flows to Europe during this and last winter, it's credit default about ten years ago, it's conflict with Canada over undersea oil assets, it's handling of political opposition, and it's dubious democracy.  Basically, we think the rule of law and property rights are likely to be stronger in Brazil, India and China than in Russia in the intermediate term.  Russia may bubble again, and may be a trading market, but we don't think it is a reliable long-term investment market.

The economies of all four countries are impacted negatively by the world economic decline.  Brazil as a natural resource exporter may recover earlier than India and China which are natural resource importers.  Australia (proxy EWA) is also an important natural resource exporter which may recover early during an economic recovery as well.

The sovereign and quasi-sovereign debt of emerging countries overall has recovered to a great extent from the Q4 2008 credit problems experienced around the world.  While they have not done as well as US Treasuries, they have come back substantially from Q4 losses.

The bond fund chart below shows the fund in candlestick format, with price performance relative to the 7-10 year US Treasury fund (IEF) immediately below, and absolute price performance in the bottom frame.

Emerging Markets Gov't/Agy Debt vs US Intermediate Treasuries
(proxies: EMB and IEF)

Emerging markets deserve close watching.  They will likely surge again.  The growth of wealth and global economic significance of emerging economies will likely continue in the long-term, the current world economic problems notwithstanding.

The famous investor, John Templeton, said that bull markets are born in pessimism, grow on skepticism, and die in euphoria.

We certainly have pessimism, but unfortunately don't know whether we are near maximum pessimism. At some point, emerging markets should be an extraordinary investment opportunity.

By Richard Shaw 
http://www.qvmgroup.com

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Copyright 2006-2009 by QVM Group LLC All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

Richard Shaw Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

rajesh
04 Feb 09, 20:23
emerging markets

hi sir,

as you have said rightly, we are in pessimistic mode, but not at extreme pessimism. long way to go in that aspect. still ,people in here in India are bullish about markets. that is a worry some aspect. they have to be bearish , until then markets wont find their bottom. " there are really extraordinary opportunities available" - there is no doubt that.

rajesh n


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules