The past week (from March 28 to April 1) was marked by a continuation of the rally in emerging markets; the main beneficiary was the South Korean stock market, where the local KOSPI index grew by more than 3% over the week.

The past week (from March 28 to April 1) was marked by a continuation of the rally in emerging markets. At the same time, the main beneficiary was the South Korean stock market, where the local KOSPI index grew by more than 3% over the week and reached new historical highs.

According to Vladimir Bragin, director for analysis of financial markets and macroeconomics at Alfa Capital Management Company, last week turned out to be quite successful for emerging markets. The vast majority of indices closed in positive territory, both in resource-oriented countries and those oriented towards industry. For example, the Korean KOSPI index closed in positive territory by 3.25%, the Brazilian Bovespa stock index added 2.2%, and the Russian MICEX - almost 2%, the expert emphasized.

We note that Brazil's Bovespa received an additional growth catalyst in the form of an increase on April 5 by the international rating agency Fitch Ratings of Brazil's local currency issuer default rating and its foreign currency issuer default rating from BBB- to BBB. The agency also upgraded the country's country ceiling rating from BBB to BBB+. The forecast for all ratings is “stable”.

Nord-Capital analysts note that among the outsiders of the past week was the Chinese stock market, which decreased by 0.5%, although it showed strong growth in the last trading session. According to experts, the reason was the release of data on the index of industrial production in China. The published results showed that the monetary containment policy pursued by the Chinese authorities did not cause significant damage to the rate of economic growth and industrial production continues to grow at a strong pace. “Despite the results of the last week, the Chinese market feels quite confident this year, being one of the best in terms of profitability for the first quarter among the largest emerging markets (+3.9% quarterly),” the experts emphasized.

Speaking about the results of the first quarter of 2011, which ended last week, MDC analysts note that the profitability of the Shanghai Composite exceeded 17% year on year, while the “big brother” Hang Seng “squeezed out” just over 8.5%. According to experts, the Shanghai Composite has not been able to gain a foothold at the psychologically important level of 3,000 points since mid-November last year, as the Chinese authorities are keeping quotes from a rush increase with injection rates.

This is not the first time this year that the Chinese Central Bank of the Russian Federation has restrained this measure of curbing the hyperactivity of speculators and accelerating inflation by increasing the rate and reserve standards. The last one took place on Tuesday, April 5th. The People's Bank of China raised its base rates for annual loans and deposits by 0.25 percentage points. This is the second time this year and the fourth since October 2010. increase in base rates of the Chinese Central Bank. The discount rate on 1-year RMB loans was raised to 6.31%, and the rate on annual RMB deposits was raised to 3.25%. The decision came into force on April 6, 2011.

In general, last week a good impetus for developing markets was given by rising oil prices (Brent exceeded $120 per barrel), food, as well as the preservation of excess liquidity in the markets, notes V. Bragin. “Events in Japan and unrest in the Middle East have not been able to dampen the mood of investors investing in emerging markets, most of whom, by and large, benefit from both tensions in the Middle East and the future restoration of infrastructure in Japan,” concluded V. Bragin.

Director of Retail Services at Deutsche UFG Capital Management: Galina Romanyuk notes that oil prices have increased significantly recently due to rising global demand and ongoing tensions in the Middle East. "These dynamics certainly have a significant impact on the BRIC countries. But the impact varies and depends on factors such as the direction and size of the oil trade balance and the extent to which world prices differ from domestic prices. The impact of exposure to moderately high oil prices is negative for India and China, neutral for Brazil and positive for Russia. However, a significant jump in oil prices could reduce global demand and introduce downside risks to the growth of all BRIC countries," G. Romanyuk emphasized.

Confirmation of the “benefit” of high oil prices for Russia more than for other BRIC countries is the significant decrease in the cost of sovereign insurance for Russia against default (reflected in the dynamics of five-year credit default swaps CDS) returned to the pre-crisis level, below 125 points (to be precise, then to the level of August 2008). We attribute this to high oil prices and likely positive forecasts for the future.

Quote.rbc.ru

Emerging markets: Almost everyone is a winner