Developed markets walked away with the laurels in 2013 even as emerging markets panted behind them. Indian market put up goldilocks performance — not too good, not too bad — relative to its global peers.

The BRICS quintet put up a disappointing show with India and South Africa helping shore their performance. Venezuela is the top performer this year and is up a massive 477 per cent. Fear of hyper-inflation and currency crisis are being cited for the rise. The country led the table in 2012 as well with a 303 per cent rise.

BROKEN BRICS India and South Africa are the only two BRICS markets that have gained this year. The US Federal Reserve signalling an early tapering on its asset purchase dragged the stocks in these markets sharply lower. However, there was a recovery when the US hinted at a postponement of the tapering in September.

The Indian benchmark indices, Sensex and Nifty, rose to record highs. Though both the indices are up 8 per cent and 6 per cent respectively this year, their performance is not good compared with the 26 per cent and 28 per cent rally in 2012. Similarly, the South African stock index also rose to new high and is up 14 per cent for the year as compared with a 23 per cent rise in 2012.

The other BRICS markets are down. Brazil, down by 16 per cent is the worst performer. Slowdown in the commodity demand, foreign money outflow and inflation hitting a high of 6.7 per cent, which made the Brazilian central bank hike rates to 10 per cent from the record low 7.25 per cent were the major reasons for Brazil’s underperformance. China and Russia are down 7 and 5 per cent respectively this year.

DEVELOPED MARKETS Economic revival and the impact of stimulus gave a head start to developed markets. Japan leads the pack. Thanks to the new Prime Minister Shinzo Abe’s policy of providing unlimited stimulus, popularly termed in the market as Abenomics. The Nikkei is up 54 per cent this year compared with 23 per cent rise in 2012.

An improving job and housing market took the Dow Jones Industrial Average and S&P 500 to their life-time highs. These indices are up 25 per cent and 29 per cent respectively. The Nasdaq gained 38 per cent though it is yet to surpass its 2000-peak.

In the Euro zone, Germany’s DAX recorded new high this year and is up 25 per cent, a little less than its 29 per cent rise in 2012. France’s CAC and United Kingdom’s FTSE are up 13 per cent and 14 per cent respectively.

The Euro Zone coming out of the recession and improving business sentiment are the positives while a high 12 per cent unemployment rate still remains a worry.

The emerging markets, once a hot investment destination were definitely not on the investors’ radar this year. Their currencies tumbled as the foreign investors started pulling out money on the fear of early US tapering and their stock markets were beaten down.

Taiwan and Malaysian markets fared relatively better among the major emerging economies, up 10 per cent and 9 per cent respectively. Indonesia’s Jakarta Composite index is down 3 per cent this year, in spite of recording new high. Singapore and Mexico are also down by 1 per cent and 3 per cent respectively as compared with 20 per cent and 18 per cent rise last year.

>gurumurthy.k@thehindu.co.in

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