Emerging Markets Bull Market Rally
The chart above (click to enlarge) shows year-t0-date (YTD) returns for the stock markets of the emerging markets, according to MSCI Barra (data here). In contrast, the YTD return for the USA Index is 8.76%.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Friday, July 24, 2009
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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3 Comments:
I completely agree with the implications of this post that there's some serious growth out there.
But it also is important to note that these markets had a big fall last year. For example, Indonesia's one year return is negative 12.08%. That's after the 71.01% recovery.
That still does beat the negative 23.89% one year return for the US. But not by nearly as much as if you'd only be in since January 1.
BTW, keep an eye on Thailand. They have a great future supplying China with food, raw materials, and eventually, cheap labor manufacturing.
Despite the public turmoil, it is a reasonably well-run country, good citizenry. A great investment.
Investors should not only be aware of the astounding investment returns from emerging markets as shown above, but also of the economic fundamentals driving these trends. According to the IMF, developing nations will account for more than 50 percent of world economic output by early next decade, up from just one third in 1997. As growth slows in the developed world, it is accelerating in the emerging markets. These countries’ growth drives world demand for energy and materials, and at the same time, they control more and more of the planet’s scarce natural resources. National oil companies already control between 80 and 90 percent of the world’s oil reserves, and this number is climbing fast. As resource prices climb, these countries’ currencies, as well as foreign companies with energy and commodities exposure, will gain immense value. Between the diminishing strength of the U.S. dollar and the increasing value held by these foreign nations, investors with a stake in the BRACC countries (Brazil, Russia, Australia, Canada, China) will get the best bang for their buck over the coming years. –www.leeb.com
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