Sunday, March 16, 2008

Global Returns Year-to-Date: The Emerging Markets Decoupled

Here we see year-to-date returns for a number of global markets, including the U.S. (SPY); Australia (EWA); Canada (EWC); Germany (EWG); Hong Kong (EWH); Japan (EWJ); Brazil (EWZ); South Africa (EZA); and China (FXI).

Note that returns have been negative across the board, with resource rich Brazil, Canada, South Africa, and Russia (not shown) faring far better than resource consumers in Asia.

Note also that the strongest emerging markets (China, Hong Kong) are now leading the downside, nearly doubling the losses in the U.S.

Perhaps most notably, we now see that the once seemingly monolithic "emerging markets" have decoupled, with Brazil and Russia outperforming the world and China dramatically underperforming.