Emerging Markets Contiune To Rally Throughout November

Emerging markets look set to be the top-performing asset class of 2009. Over 12 months, the Global Emerging Markets sector remains the best performer, with an average return of 67.9%. The Asia Pacific ex Japan sector is just behind, having delivered 66.4%.

November was another buoyant month for most emerging markets. Brazil's Bovespa index climbed an impressive 8.9% as President Lula said the country would show "Chinese style" growth in the third quarter and estimated GDP would climb 9%. With international reserves still at $233bn (£142bn), the government has plenty more in its arsenal if the global economy takes another lurch down. Industrial production picked up by 0.75%, which was slightly behind expectations while interest rates remained at 8.75%.

Elsewhere in Latin America, the Mexican market also did well, with the MSCI Mexico up 8.87%, while the MSCI Peru rose 11.97% as buoyant economic news from India looked set to create greater demand for commodities. Chile was the only laggard, in spite of 1.1% GDP growth in the third quarter. The MSCI Chile index dipped 1.51% over the month.

India was also strong. The S&P CNX 500 index rose 7.6%, driven by stronger than expected growth. GDP rose 7.9% in the third quarter, compared to an expected rise of 6.3%. A survey from the Warwick Business School also said India was likely to remain a dominant force in information technology and outsourcing.

The Indian Government said this economic strength had been driven by the fiscal stimulus packages, leading analysts to begin to contemplate a potential interest rate rise. However, the monsoon should affect agricultural growth in the next quarter and bring down the statistics. There are also worries remittances and exports will be affected by the uncertain situation in Dubai.

In China, stockmarket performance was slowed by whisperings about bubbles. The chief executive of Soho China, a leader property developer in China, talked of "rampant wasteful investment" driven by excess capacity in the system. This was one of the causes of the 1997 Asian crisis - too much money being spent on unnecessary investment - and any hint of a repetition understandably set nerves jangling. Nevertheless, the FTSE Xinhua index managed a 6.3% rise over the month.

Russia's GDP grew 13.9% on an annualised basis over the second quarter, though it was still 8.9% down on last year. Equity market performance was dampened by unsupportive comments from the Russian deputy prime minister, who said the equity market was "over-heated". The benchmark RTS index rose just 2.2% over the month.