BRIC Rebounds in 2009

The stock markets of the so-called BRIC countries, Brazil, Russia, India and China, have drastically outperformed the US equity market so far in 2009. The BKF, an ETF tracking the MSCI BRIC Index, is up 40% year-to-date while the S&P 500 has hardly eked out a 5% gain.

The price performance of these markets has fell in line with what investors would expect. The emerging markets dropped to a low of negative 65% in the first 10 months of 2008 taking a much larger hit than the more-established US equity markets. But while the S&P was stilling falling in early 2009, emerging markets had stabilized and investor's risk appetite returned.

The oft-repeated rotation from risk aversion back to risk seeking has occurred in 2009. The BKF is now down 35% from the beginning of the US recession starting in December 2007 while the SPY is down just 30%. Rapid growth economies are the places to be in economic turnarounds.