Recent USAA market commentary on emerging markets highlights the outperformance of BRICs [Brazil, Russia, India and China] equities in the four-year period of 2003 – 2006. Take a look at the numbers, plus we’ve crunched the four-year average annual return for the Nikkei 225 as well.
- BRICs: 49.9%
MSCI Emerging Markets Index (inc. BRICs): 38.2%
MSCI EAFE Index: 24.4%
Nikkei 225 Stock Average: 18.5%
S&P 500: 14.7%
The Nikkei 225 returned 5.3% in 2006, 40% in 2005, 6.1% in 2004 and 22.5% in 2003. Based on the trend, 2007 should be a year of double-digit gains … it certainly isn’t at this point!
nikkei 225
Nikkei Shimbun reports Thomson Financial data: Jan – June 2007 BRICs accounted for over 21% of global IPOs (159/743) and 1/3 of capital raised (approx. 6 trillion yen or about US$49B), 2.2x last year’s same period total.
Also, the USAA commentary notes year-to-date May 31, 2007, MSCI Emerging Markets Index is outperforming BRICs 12.3% vs. 8.9%. And MSCI EM is much cheaper based on p/e ratio at 13 compared to Brazil and Russia at ~16, India ~22 and China ~33. USAA suggests not overlooking the other emerging markets. A recent T. Rowe Price summary notes certain EM outperformance and says its believes it’s unsustainable.