Emerging equities’ amazing first quarter rally now seems a distant memory. In fact MSCI’s main emerging markets index recently spent 11 straight weeks in the red, the longest lossmaking stretch in the history of the index. The reasons are clear — the euro zone is in danger of breakup, growth is dire in the West and stuttering in the East. Weaker oil and metals prices are hitting commodity exporting countries.
Over the past year emerging markets have broadly lagged an upswing in global equity markets, yielding cumulative returns of 4.5 percent since last August. That’s less than half the return developed markets have provided (see graphic below).
It’s been a while since Chinese stocks earned investors fat profits. Last year the Shanghai market lost 22 percent and the compounded return on equity investments there since 1993 is minus 3 percent. This year too China has underwhelmed, rising less than 3 percent so far. Broader emerging equities on the other hand have just concluded their best first quarter since 1992, with gains of over 13 percent.
How are hedgies performing this year?
The latest performance data from Nice-based business school EDHEC-Risk Institute shows various hedge funds strategies returned on average 1.46% in January, far behind the S&P 500 index which gained almost 4.5%.
from Jeremy Gaunt:
MSCI, the index provider used by leading investors across the world, has decided it needs a name change in Greater China. In a news release this morning the firm (which is no longer owned by Morgan Stanley, the MS in its title) said its Chinese business would henceforth be branded as MSCI 明晟.
from Jeremy Gaunt:
Depending on how you look at it, August may not have been as bad a month for stocks as advertised. For the month as a whole, the MSCI all-country world stock index lost more than 7.5 percent. This was the worst performance since May last year, and the worst August since 1998.
Emerging market stocks have been a big favourite among investment managers this year, based on the view that long-term growth patterns remain in place despite the wobbles in developed economies. But it has not been an easy ride. MSCI’s emerging market stocks index has been in an out of positive territory for much of the year. It has just moved back into the black after a rally of more than 16 percent since late May.