As we have been saying for quite some time, we expect emerging markets to outperform more developed economies, as the U.S., European markets and Japan. In fact this trend already started, as can be seen by seen by analyzing the benchmarks in local currencies we can reach some interesting conclusions.
Starting off, the S&P 500 (SPX) is a long way down since October 2007.
S&P 500 (Jan 2007 to Mar 2009)
On the other hand, if we analyze the Shanghai Composite divided by the S&P500, we can see that this relation reached a peak in the beginning of 2008 when the S&P500 was already falling. More recently, in the beginning of 2009, the Shanghai Composite started to outperform the U.S. benchmark again, as it did until January 2008.
Shanghai Composite/S&P 500 (Jan 2007 to Mar 2009)
Analyzing the Brazilian benchmark Bovespa is not that different. The Brazilian index continued to climb up against the S&P until mid 2008 and started to outperform the U.S. benchmark in the end of 2008 and reached a new relative peak in March 2009.
It seems that the crisis had three different moments: in the beginning of the crisis the U.S. market was falling but emerging market were still up. In the second moment the U.S. market collapsed and so did emerging markets . In fact during the worst days between Aug 2 and Nov 2008 emerging markets under performed the U.S. benchmark.
More recently, emerging economies begun to outperform the U.S. market again. We believe this movement will be even more apparent in the following months as the U.S.
