MARKET COMMENT
Emerging Markets On Top (Again) In 2002

By Maynard Paton (TMFMayn)
December 24, 2002

With the FTSE 100 down 25% since New Year's Day, 2002 has been another tough year for UK investors. But the portfolio pain has not been confined to these shores. Most major stock markets around the world have -- yet again -- registered dreary performances in the past twelve months. However, a handful of overseas markets did record some notably positive performances.

Most European bourses fared just as badly as the UK. In sterling terms, the German market has fallen 39% so far this year, while Dutch and French shares have declined by 32%. Scandinavia has performed particularly poorly too, with the Swedish, Finnish and Norwegian indices losing 32%, 29% and 20% respectively.

The major markets around the globe endured another tough twelve months, too. In the US, the S&P 500 dived 29%. And it was an all-too familiar stock market story in the Far East. Japanese investors witnessed the Nikkei 225 plunge 19%, while Hong Kong shareholders saw their market report a 23% decline on the year.

So where were the year's bright spots? Just like 2001, you had to go off the beaten track to have produced robust returns.

As long as you were happy investing in Argentine pesos, the Buenos Aires market provided rich pickings. Year to date, the Merval index is up 76%. On a sterling basis though, you'd have lost 53% following the currency's devaluation. However, Ecuador was a genuine South American winner, up 37% in sterling terms. Other places UK investors should have invested their pounds were Pakistan, up an amazing 85%, Kuwait, up 28% and Indonesia, up 15%.

Many Eastern European punters will also be sporting broad grins this Christmas. Adjusting for currency movements, shares in Bulgaria (up 64%), Estonia (up 55%), Slovenia (up 53%), Slovakia (up 26%), Russia (up 26%), Latvia (up 24%) and Hungary (up 22%) all did the business for their investors this year. But star of the former Eastern bloc was Romania, whose market has surged a staggering 91% since January.

Finally, the place to be seen trading during 2002 was Zimbabwe. Following a few turbulent years, the country's Industrial index soared 98% in 2002. However, it was Zimbabwean mining shares that provided the greatest rewards. On a sterling basis, the Zimbabwe Mining index registered an astounding 155% increase over the year. Incredibly, those tracking this particular index that had the foresight to sell out during its November peak would have almost quadrupled their money in 2002!

More: Emerging Markets On Top In 2001 | Should You Invest In Emerging Markets? | International Investing