If the BRICs are crumbling, nobody told their stock markets

March 26, 2014
March 26, 2014

Brazil was just downgraded. Russia’s profitable oil-and-gas pipelines are under threat after its Crimea caper. India’s growth rate is half what it was a few years ago. China is trying to forestall a possible “Bear Stearns moment.”

Investing in the club of large, up-and-coming nations known as the BRICs is not looking particularly attractive.

And yet, their respective stock markets are some of the best performers of the week. Here’s a snapshot of where selected markets stand midway through Wednesday.

Weekly-performance_chartbuilder

What’s going on here? Several different things.

Some of these markets are just recovering from recent selloffs. For instance, Russia’s benchmark MICEX index is snapping back after a nasty fall. (It’s still down more than 8% over the last month.)

Optimism around India’s looming elections seems to be driving stocks in the world’s largest democracy higher. (India’s benchmark Sensex hit a record high recently.)

The buoyancy in shares of mainland Chinese firms—captured by the Hang Seng China Enterprises index—and Brazil’s Bovespa seems a bit more speculative. It’s basically the old “bad-news-is-good-news” rationale, where economic weakness is viewed as a reason to expect imminent government intervention to prop up growth. Brazil’s commodity-heavy corporations would also benefit from a push by Chinese policymakers to keep the economy growing at a health clip. But if the government doesn’t show up on cue—look out below.

 

 

 

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