2006 Global Returns: China, Russia Drive Big Gains

David Gaffen observes that "the past 12 months presented a good time to buy a passport for your portfolio." Via his WSJ blog MarketBeat, here are Global Returns for 2006:

Index	Change
China	107.02%
Russia	51.01%
India	49.11%
Brazil	39.50%
Mexico	37.62%
Hong Kong	34.45%
Germany	32.59%
France	30.95%
U.K.	26.52%
Australia	25.73%
South Africa	18.17%
Taiwan	14.54%
USA	13.86%
Japan	5.17%
Israel	-6.36%
Turkey	-10.54%

As good as the returns were in the U.S., they didn't hold a candle to emerging markets and overseas returns. The table shows the strength of overseas markets, from BRICs to France to U.K.

The big inflows had some strategists (not us!) thinking investors moved into the emerging markets at exactly the wrong time: World equity funds had inflows of $104.61 billion in 2005, compared with $31.19 billion for domestic equity funds [ICI].

The 1st four months of 2006 were the biggest for domestic inflows -- at least $18.32 billion per.
Since then, a curious stat developed: a majority of fund managers polled by Merrill Lynch believe global stocks will be higher in a year’s time, and the greatest number thinks that if one market is overvalued, it’s the U.S. market.

Are emerging markets maturing? Or is this merely a testament to the global glut of liquidity?

Comments

[NO DooDahs:]

You say "(not us!)" and in reviewing the article, the "(not us!)" doesn't appear. I take that to mean that YOU, or Ritholtz Capital, thought that emerging markets made a good play at some point in 2006.

Did you ever express that position in your blog, sir?

If so, please direct your readers to a post or link where you DID express that opinion.

If not, why are you now crowing "(not us!)" - it's unverifiable.

What is your current opinion of the tradeability of the foreign markets? I can read MarketBeat via MarketBeat, it would be nice if you could add value to the conversation.

FWIW - at the moment I'm bullish on China and Mexico, the Wifeykins has the ETFs in her IRA (with trailing stop loss orders), but I am not trading the ETFs in my account. I have one China stock that I am long (and wrote about) and two others on the watchlist. I have no opinion or position on other foreign markets.

2007 Jan 03 11:09 AM