Dog’s dinner in the BRIC nations

BRIC nations, equity market performance year to date, August 20th 2012

To me the old Wall Street expression “stocks climb a wall of worry” describes the US equity market’s current rise, with the S&P 500 up 12.76% YTD as of yesterday’s close. Still, because of the wobbly / deteriorating fundamentals of the American economy, as well as relatively sharp rise in share prices, along with geopolitical worries, I do expect a rather sharp correction in US equities before the elections this year. Still, I thought I’d take a look at the rest of the world, starting with the BRIC nations. The chart above shows the year to date performance of (from left to right and in decreasing gains) India, Brazil, Russia and China. Clearly China is the laggard, as fears of a hard landing appear to coming to fruition. Although India is the clear winner here, up 13.81% YTD, you’ve got to be careful here as inflation is running at over 9% even as the economy grows at roughly 7%. Russia’s growth forecasts recently have been downgraded although it’s economy is still growing faster than most EU nations. Brazil looks to be growing modestly, however inflation is set to surge. So, as The British say, a real dog’s dinner, you can’t just invest in the BRIC nations anymore, sit back, forget about it and make money.

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