Think emerging market stocks are dogs? Think again

These so-called dogs are proving world beaters, with eight out of the top 10 stock indices coming from the developing world last year and Asia continuing the winning run this year.

Emerging market stocks are dogs. A minimum of that\’s what lots of investors have started to believe in the past few years, but their total shareholder returns in the last year suggests just the opposite is true.

FP0324_TSR_310_JRLed with a resurgence in Chinese stocks, eight from the top 10 equity indexes on the planet were located in developing markets in 2014, and Asia\’s top benchmark, MSCI Asia-Pacific Index, has continued its recent run this season. It rose for the fifth straight day on Tuesday, and it is now up 8.26% so far in 2015.

\”Once again, emerging markets delivered the greatest total shareholder return, taking the top six spots and eight from the top 10 market spots,\” said Boston Consulting Group in the latest research of worldwide equity markets.

BCG analyzed a lot more than 6,000 companies across 44 markets as part of its 2015 Value Creators report, which will be published entirely later this spring.

China delivered the highest annual return of all of the countries in the study, gaining 67% in combined capital appreciation and dividends paid this past year.

Argentina was the next best, followed by India, Indonesia, Turkey and also the Philippines, while the top performing country in the developed world, but seventh overall, was Denmark, which gained 23%. Canada gave investors a 12% return.


China\’s massive rebound from being one of the worst performing markets in 2013 belies the fact that many emerging markets have performed more than the past 4 years.

Dubai, South Africa, Argentina and also the Philippines, for instance, have all produced total returns greater than the global average over that time period.

Even so, the BCG results are somewhat surprising because of the myriad challenges that emerging markets have faced to date this decade, including slower growth in China and the Euro area, lower commodity prices, prospects for higher U.S. yields along with a stronger greenback.

\”The backdrop for EM economies is continuing to grow tougher since 2011 and can likely remain so within the next few years, said Barclays analysts in the annual gilt study.


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