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Emerging markets have benefited from the Fed easy money policies. Those policies, with their low interest rates, have prompted investors to hunt for higher rates of return overseas.
In Brazil, stocks have rallied after polls were released that showed opponents of Brazilian President Dilma Rousseff gaining enough ground to Nike Vapormax Air Max 97
Brazil and other emerging markets rally
the most important driver year to date has been the global financial conditions, says Gerardo Rodriguez, a senior investment strategist for BlackRock emerging markets group.
Others are more skeptical of this year gains in emerging stock markets.
lira dropped almost 11 per cent in five months from the start of September to the end of January 2014. has disappointed. Treasury yields have fallen instead of rising as most analysts predicted. As a result, emerging economies with higher growth are more attractive. and invest in overseas economies that offer higher returns.
The Brazilian stock market may also get a boost if its team, the favourite to win the World Cup, lifts the trophy at the end of the tournament. Analysts at Goldman Sachs calculate that, on average, a victorious country stock market outperforms the global market by 3.5 per cent in the first month after the win.
message for investors is, don treat (emerging markets) as one, he says. is very important to do your homework at the country level.
its rate from 7.25 per cent in September to 8 per cent in March; Brazil hiked rates from 7.5 per cent in May of last year to their current level of 11 per cent.
The spotlight on Brazil has also highlighted potentially damaging rifts in the country. Subway workers have been on strike demanding higher pay and improved benefits. Teachers remain on strike in Rio de Janeiro and routinely block streets with rallies. Police in several cities have also gone on strike, but are back at work.
The shifts are reflected in the financial markets. stock market over the last month months are smaller than those in emerging markets.
have a chance of forcing a runoff in elections scheduled for Nike Vapormax Chukka Slip Black October. Her opponents, Aecio Neves and Eduardo Campos, are believed to favour less government involvement in the economy. economy, begins to pick up later in the year, says Mauro Ratto, head of emerging markets at Pioneer Investments, a fund manager.
Brazil has company. From Sao Paulo to Mumbai, investors are regaining their faith in emerging markets this year.
The MSCI Emerging Markets index, which measures 800 securities across 21 markets, fell almost 10 per cent from the start of May to the end of June, and ended the year down almost 5 per cent. The Turkish Nike Air Vapormax Plus Release Date
countries have done some homework to reduce their fragilities, says Jorge Mariscal, chief investment officer for emerging markets at UBS Wealth Management. have helped themselves a bit. Five raised interest rates to draw investors cash back into their countries. India, for example, lifted Nike Vapormax White Sail
Last month, Narendra Modi and the Hindu nationalist Bharatiya Janata Party notched the most decisive Indian election victory in three decades. Modi marketed himself as a leader capable of shaking the nation from its economic slumber, and his clear win should allow him to reform the economy.
Soccer fans will focus on Brazil and the start of the World Cup Thursday, but investors have been entranced by that nation stock market for months.
Politics are also playing a role.
It a big shift from 2013, when investment in those markets dried up because of worries about their slowing economic growth. It got so tough that five big developing markets Brazil, South Africa, India, Indonesia and Turkey were dubbed the Five by analysts at Morgan Stanley.
Now those countries are much more appealing to investors. Some have taken actions to strengthen their economies. Others have gone through political changes that have bolstered investor confidence. has made investing overseas more alluring.
The Standard Poor 500 index has climbed 12 per cent since closing at its year low on Feb. 3. The MSCI India, a broad index of Indian stocks, has surged 30 per cent over the same period. Turkish stocks have jumped 44 per cent and Brazilian stocks are up 26 per cent.
In India, the government has also raised duties on gold. The metal is India second biggest import behind oil, and purchases have soared in recent years as incomes have risen there. The increased buying has sped up the flow of money out of the country, and weakened its currency.
Last year, however, when the Fed started to outline its plan for reducing stimulus and raising rates, investors began pulling their money out of emerging markets. That caused their currencies, as well as their stock and bond markets, to plummet.
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