Indian stocks: worst performer this year
By siliconindia | Monday, 19 March 2007, 05:00 Hrs
Mumbai/New York: Stock markets in India, China and Russia have found themselves among the 10 worst performers this year as they are losing their allure for stock investors reported a national daily. As corporate profits show signs of flagging,these countries(including Brazil) have fallen twice as much as developing nations as a whole. This comes despite the fact that in the past five years, each market has at least tripled, helped by an economic boom that exceeds 10 percent a year in China. Jim O'Neill, chief economist at Goldman Sachs Group Inc, who coined the BRICs acronym, had said Brazil, Russia, India and China would join the US and Japan as the biggest economies in the world by 2050, eclipsing most of today's developed nations. Now the growth is getting choked by inflation and straining production. China, the fastest, raised interest rates for the third time in 11 months after Premier Wen Jiabao said last week that expansion in the quickest-growing major economy is "unsustainable." India, the second fastest, is stepping up price controls, and Russia's energy producers face higher costs to develop oilfields. "The stock markets grew significantly ahead of the underlying prospects for their economies," said Peter O'Reilly, who manages $2.4 billion (Rs10,576 crore) at IG International Management in Dublin. "It's an adjustment to recognize the fact." The Morgan Stanley Capital International BRIC Index, tracking all four developing countries, fell 1.5 percent last week to 262.86. MSCI's Emerging Markets Index, consisting of 25 markets worldwide, dropped 0.7percent. Earnings growth at companies in India's Sensitive index will drop almost 50 percent in the coming 12 months, HSBC said. Profits for Russian companies will rise just 1 percent after increasing an average of more than 50 percent since 2003, Alfa Bank predicts. The Hang Seng China Enterprises Index, tracking shares of mainland companies that international investors can buy and sell freely in Hong Kong, posted average gains of 37percent, and India's Sensitive Index added an average 34 percent.Russia's ruble-denominated Micex Index has surged at an average annual rate of 48 percent for the past five years, the best performance of the four.