Mexico step up and replacing China
Developing markets tend not to like periods of turbulence, when capital seeks a safe haven, for example in America or Switzerland. The last three years have been a cause for concern, with not only pandemic and war but also falling inflation causing major problems.
Still, there are some developing countries whose stock market performance (in dollar terms) has climbed back above pre-Covid levels:
The many lines may make it difficult to see, so I’ve compiled a table of what performance in dollar terms investors who invested in the following countries at the end of 2019 could expect:
As you can see, not many equity markets have delivered meaningful returns over this nearly 3-year period. It is interesting to note that the optimistically priced Indian equity market has continued to boom and although it has had a high P/E ratio in the past, this has not meant that it has underperformed in turbulent times. Mexico, perhaps the biggest winner from the US-China conflict, is on the march: its geographical proximity and cheap labour are attracting supply chains from the Far East.
China’s zero-covid policy is not rewarded by the markets and the anti-US rhetoric, the property bubble and Xi Jinping’s absolute power are not investor favourites either, as reflected in the pricing of Chinese assets.
In our region, the Poles, with their extensive stock market, have been hit hard, with shareholders punished for their opposition to the EU, special taxation of companies and the proximity of war.
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