Sunday, September 6, 2009

Stock Markets: The Best And The Worst in 2009

The best: Peru
The worst: Nigeria
After a miserable 2008, close to twenty stock markets worldwide have so far this year gained more than 50 percent. The top 10 by returns are all so-called ‘emerging markets’. Glancing at some of the numbers:

The first number is the country’s main stock index return in 2009 (to Sept 4) in US$. The second number shows the same but in local currency.

Peru 114% 101%
Indonesia 92 71
Brazil 89 51
Turkey 74 68
Russia 68 68
Vietnam 64 67
India 62 63
China (A-share) 57 57
Chili 56 35
Taiwan 55 56
Hungary 54 54
Argentina 48 64

France 15 12
Germany 15 12
US (S&P500) 12 12
Japan (Topix) 6 9
Bahrain -16 -16
Nigeria -37 -30
Source: Bloomberg

For international investors, playing the right currency has been an important driver of performance. In some markets like Brazil, Indonesia and Chili, the appreciation of the local currency versus the US$ has added more than 20 percent to stock market returns.
However in Argentina, the weakness of the Peso has reduced US$ returns by 16 percent.

We would not expect returns to get much better globally before year-end. Some markets appear frothy on various measures; be they technical or fundamental. For example in Vietnam, the price/earnings ratio of 31 is the highest in Asia. In Brazil, the real has appreciated over 20 percent versus both the US$ and the Euro in 2009.

Take some profits.

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