Emerging Markets Post Gains in Rough First Quarter
Global stocks posted their sixth straight consecutive losing quarter for the period ending March 31. But some trends have broken free from a battered Wall Street lately as investors begin to return to markets once perceived as riskier than advanced economy markets.
In some ways, the emerging economies offer a safer haven than mature markets in 2009. That’s because the former largely maintain healthier finances, positive trade balances and did not delve deep into the Anglo-Saxon and European mortgage-backed fiasco that triggered the subprime crisis almost 20 months ago.
In March the MSCI Emerging Markets Index surged 14% and gained a modest 0.5% in the first quarter compared to a loss of 12.5% for the MSCI World Index of industrialized bourses. In March, the MSCI World Index gained 12.5%. The S&P 500 Index gained 8.5% in March but declined 11.7% in the first quarter.
Within the emerging markets universe, several indices posted impressive double-digit gains and finished the first three months of the year in positive territory.
That marks the first time since the fourth quarter in 2007 that emerging markets finished in positive territory – outpacing the major markets. The MSCI Latin America Index gained 10.6% in March and is now up 4.5% in 2009 – the best-performing regional index in the Morgan Stanley Capital International (MSCI) database.
Despite these statistics, it’s highly unlikely global markets have embarked on a secular bull market. Domestic consumption in the United States has collapsed and there’s no other country or region to take its place in 2009 or any time soon.
According to the World Bank, the global economy is forecast to contract by 1.7% and global trade by 6.1% in 2009 – the worst set of numbers since WW II. It’s highly unlikely markets have discounted the severity or duration of this recession and therefore stocks might not be the best bargains at these levels. In fact, the odds favor more weakness as first quarter corporate earnings season begins next week. And the news won’t be bullish.
In some ways, the emerging economies offer a safer haven than mature markets in 2009. That’s because the former largely maintain healthier finances, positive trade balances and did not delve deep into the Anglo-Saxon and European mortgage-backed fiasco that triggered the subprime crisis almost 20 months ago.
In March the MSCI Emerging Markets Index surged 14% and gained a modest 0.5% in the first quarter compared to a loss of 12.5% for the MSCI World Index of industrialized bourses. In March, the MSCI World Index gained 12.5%. The S&P 500 Index gained 8.5% in March but declined 11.7% in the first quarter.
Within the emerging markets universe, several indices posted impressive double-digit gains and finished the first three months of the year in positive territory.
That marks the first time since the fourth quarter in 2007 that emerging markets finished in positive territory – outpacing the major markets. The MSCI Latin America Index gained 10.6% in March and is now up 4.5% in 2009 – the best-performing regional index in the Morgan Stanley Capital International (MSCI) database.
Despite these statistics, it’s highly unlikely global markets have embarked on a secular bull market. Domestic consumption in the United States has collapsed and there’s no other country or region to take its place in 2009 or any time soon.
According to the World Bank, the global economy is forecast to contract by 1.7% and global trade by 6.1% in 2009 – the worst set of numbers since WW II. It’s highly unlikely markets have discounted the severity or duration of this recession and therefore stocks might not be the best bargains at these levels. In fact, the odds favor more weakness as first quarter corporate earnings season begins next week. And the news won’t be bullish.
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