Global Investing

Indonesia: 2011 emerging market winner

January 3, 2012

Indonesia is the only major emerging stock market to have posted any real gains in 2011, a year in which the broad MSCI emerging stock market index lost 20 percent and underperformed developed markets in a flight from risk.

But for Indonesia, which many say should turn┬áthe BRIC club into BRIIC, last year was one of surging growth, with the world’s largest coal exporter helped by rising commodity prices.

Indonesia won back a coveted investment grade rating last month, its first since the Asian financial crisis of 1997.

Egypt, in contrast, was bottom of the heap, marking down a massive 46.8 percent loss on its MSCI country index in dollar terms. Political stability has failed to return to the country yet following the ousting of Hosni Mubarak as president in February, international reserves are dwindling and the country has been downgraded by all three major ratings agencies in the past few weeks.

Egypt’s performance is maybe not too much of a surprise. But two former market favourites, Turkey and India, are also bringing up the rear.

Former praise for Turkey’s economic policies turned to anxiety this year at the country’s reluctance to raise rates to fend off inflation and plug a current account gap, while in India, rate rises and paralysis on reforms have depressed markets.

It wasn’t much use running to frontier markets last year to avoid global contagion either — the MSCI frontier market index fell 22 percent.

One of the few frontier market gainers was gas-rich Qatar, which is still spending money on infrastructure. And even there, the country’s stock index rose a paltry 1.1 percent.

 

 

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