Market Overview

Emerging Markets Right Now: Latin America's Oil Surprise, Africa's New Main Economy & India's Outperformance


In a recent Seeking Alpha post, Fernando Posadas shared some insights about the oil output in Latin America, where major producers have witnessed declines of almost 400K bpd year-over-year. Moreover, this figure still reflects the strong influence of Brazil, which has helped maintain output levels.

As of June, Argentina had seen a 6 percent year-over-year decline in production; Colombia, a 12 percent tumble; Mexico, a 3 percent slip; and Venezuela, an 11 percent plummet. Production across the sub-continent only grew in Brazil (6 percent) and Ecuador (2 percent).

“Taking rig count as a forward-looking indicator, we can say that Latin America will stop declines in the best-case scenario, but in the medium term,” the author concluded.

South Africa Is King Again

South Africa has managed to regain its position as Africa’s largest economy, following a two-year Nigerian tenure. According to IMF data, the swap can be mainly attributed to currency issues: while the South African rand has gained almost 20 percent over the past six months, the Nigerian naira has lost more than 38 percent – most of it during June’s devaluation.

Per IMF data, South Africa's economy is currently worth roughly $301 billion, while Nigeria’s economy reaches $296 billion.

“But look behind the league table and the light-hearted jostling about who has the largest economy in Africa and things, economically speaking, are a little bleaker. Both economies contracted in the first quarter. Another contraction and they'll both be in recession,” BBC said.

Why Indian Equity Markets Beat The Chinese

Indian equity markets have performed a lot better than Chinese markets over the past few years. For instance, over the past year, the iShares FTSE/Xinhua China 25 Index (ETF) (NYSE: FXI) has lost 8.6 percent, while the iShares S&P India Nifty 50 Index Fund (NASDAQ: INDY) slipped just 2.74 percent. Over the last five years, the former fund tumbled 4.44 percent, while the latter gained 13.36 percent.

In a recent Forbes article, Panos Mourdoukoutas shared some of the reasons behind India’s outperformance.

“First, India’s market is opened to foreign capital. China isn’t,” he said. “Indian stocks move up and down more closely in sync with the global emerging market average than the stocks of most other countries do – because its emerging markets are deep and diverse.”

Other reasons include the pace of financial reform (steadier in India), the diversity of profit-oriented companies in the Indian equity market, and the accelerating Indian growth – versus China’s decelerating pace.

Posted-In: News Emerging Markets Emerging Market ETFs Markets ETFs


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