Which asset classes performed best in 2016?
By , 19 Dec 16
2016 has been a remarkable year. The two best performing large equity markets this year are countries that have been mired in recession for years. At the same time, the stock market of the world’s fastest growing large economy has been delivering some of the lowest returns.
Latin American equities have been the best performing regional asset class this year, posting a return of more than 30%. Brazil was of course the best performing market, but Colombia and Chile, South America’s second- and third biggest equity markets, also posted returns of more than 20% in euro terms.
Mexico, which was of course hit by Donald Trump’s election to the US presidency, has been a negative outlier. It was one of very few equity markets that posted a negative return in 2016.
Did investors see this LatAm revival coming, after the asset class had suffered large losses the previous year? Not quite.
“Weak fundamentals outweigh reasonable valuations (13x forward P/E) as well as cheap currencies,” was the harsh judgement of AXA IM in December last year. They may have been right, but fundamentals that improve from a weak base could still be a foundation for a strong bull market, as has materialised in Brazil this year.
Tags: Donald Trump | High Yield | Russia | US
