Tuesday, March 26, 2013

Hard Times for Emerging Markets

While American stocks have been on fire lately - the Dow Jones already has seen the biggest increase of any first quarter since 1998, and we've still got a week to go - one investing sector has been hard-hit so far in 2013. Emerging markets stocks have lost ground this year, even as their big brothers in developed countries have done very well. The MSCI World Index is up a whopping 33 percent, but the MSCI Emerging Markets Index is down 3.8 percent.

It's odd for emerging markets to be doing so poorly while other markets are rallying. According to Bloomberg News, this is the first time since 1998 that the emerging markets have lost ground during a worldwide stock rally.

It's also odd that emerging markets would be trailing the developed global markets in such a dramatic fashion. Since 1988, emerging markets have outperformed developed markets by nearly half a percentage point during bull markets - a significant difference over the course of 25 years.

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