Article published in Les Echos  (France) on 7 April 2014

The solid recent performance of the emerging equity index is due to factors that are inherent to each country and not to a common factor. India is seeing growing interest from foreign investors, thanks to a credible monetary policy, a reduction in its external deficit, and expectations that Norendra Modi will win the elections scheduled for April and May. In Indonesia, robust growth since the start of the year has been driven by a trade account that has been in surplus since October and the enthusiasm surrounding the candidacy of the governor of Jakarta for the presidential elections in July. In Turkey the equity market rallied in the run-up to local elections in late March, hoping for the return to a calmer political environment. In Russia, the geopolitical factor (Ukraine and Crimea) at first sent market down then back up. In Brazil, the lower the popularity of President Dilma Rousseff, the higher the stock market goes. And in China, the market has been driven by the recent decision to stimulate growth selectively (via rail and low-income housing investments). In conclusion, the awakening of emerging markets reflects anticipations of political changes and some economic progress (in terms of inflation and trade balance), all against a backdrop of attractive valuations. It remains to be seen how the political, and especially economic, landscape will develop, keeping in mind that earnings growth has been weak so far.


William De Vijlder

Vice – Chairman of BNP Paribas Investment Partners