Meet the World’s Best Performing Stock Market: Pakistan: WSJ

April 1, 2008, 2:00 pm
Posted by Heidi N. Moore

If you were one of the legions of Wall Street Kool-Aid drinking emerging-markets speculators who bought into the promise of BRICs–Brazil, Russia, India and China–you would have lost a lot of money in the market thus far this year.
Instead, the only booming stock markets are those in the most emerging of emerging markets: Pakistan, Peru, and Chile. Those stocks markets have risen, respectively, 9.5%, 7.1%, and 6.6% this year, according to data provided to Deal Journal by FactSet Research Systems. Taiwan, it should be noted, posted a 7.5% rise for the first quarter.
As for the BRICs? Brazil is down 11%, Russia is down 13%, China is down 26% and India is down 40%. Overall, the average for all world markets this year to date is a loss of 11%, which makes the U.S., what, an outperformer with its decline of 9%.
Other risers include Thailand at 3% and Mexico at 1.5%; the biggest decliner after India is Turkey, down 35% since the year started.
There is the possibility that Brazil, Russia, India and China may have peaked because of all the foreign investment that has rushed into them so fast; more likely, they are now such an integrated part of the world economy that they caught the same bug that took down so many other economies. Andy Mukherjee of Bloomberg wrote in this column that a $428 billion stock glut of shares held by the government and strategic investors are coming out of lockup restrictions and will be traded soon in China.
In contrast, Pakistan, Taiwan, Peru and Chile still are flying a bit under the radar when it comes to global investment and deal making. This WSJ quarterly review article today nods at the success of such “frontier” markets.
Of course, one quarter’s success doesn’t an economy make. Investors will be watching to see if these countries, with their illiquid markets and sometimes tenuous political conditions, can grow when the world-wide competition is a bit more intense and not merely float on a rising tide.
Flickr photo courtesy of babasteve.

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