Performance of Emerging Markets over the Decade

The chart below shows the performance of emerging markets over the decade and from March thru December 2009:

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Source: Credit Suisse Global Investment Yearbook 2010

Of the 24 countries listed above, Pakistan and Argentina are considered as Frontier Markets by index providers MSCI and S&P. FTSE views all the 24 countries as emerging markets. Israel was promoted to developed market in 2008 and South Korea in 2009.

On an annualized return basis, Hungary tops the list followed by Indonesia and Turkey. Among the BRIC countries, China was the lowest performer while India was the best performer over the last decade.

Why are merging markets important to an investor?

From the Credit Suisse Global Investment Yearbook 2010:

“Emerging and frontier markets are far too big to ignore. They account for more than 70% of the world’s population (over five times that of developed markets), 46% of its land mass (twice that of developed markets), and 31% of its GDP (almost half that of developed markets). And, taken as a group, their real GDP growth has been much faster than in developed markets.

These projections show the by now familiar consensus view that key emerging markets, especially the BRICs, will continue to grow rapidly, with China expected to displace the USA  as the world’s largest economy by around 2020, and with India overtaking the USA by 2050.

In Forbes’ 2009 ranking of the top global companies, three of the five constituents with the largest market capitalizations are from emerging markets. No fewer than 11 of the top 100, ranked by total market capitalization, are from China more than from any other country in the world apart from the USA.”

Click Credit Suisse Global Investment Yearbook 2010 to download the complete report in pdf.

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