Once upon a time the mere mention of BRIC – Brazil, Russia, India and China – would send most politicians, economists and the rest of the chattering classes into a destructive tailspin of criticism as they attempted to compare, analyse, excuse and then justify their own particular country’s inadequate economic performance. Not any more. Even the shakers and movers of the world economy are not immune from the all-pervasive vagaries of domestic and international market forces, inconsistent investment decision-making and idiosyncratic international trade alliances as the recent slowdown in growth of the BRIC economies has clearly demonstrated. Yet, amidst all the economic navel-gazing and other similarly self-absorbing pursuits, one country stands tall, the United Arab Emirates.
If razor-sharp financial nouse and innovative business banking in the UAE provides the investment wherewithal then Dubai’s man-made islands, five-star hotels, gigantic shopping malls and tallest man-made structure in the world, the incredible 2,716.5 foot BurjKhalifa, adds the iconic glitz and glamour. It’s a wow-factor that captures and enthrals the millions of tourists visiting annually long before they ever set foot on UAE soil. No doubt about it, this Persian Gulf state of around 8 million people, which is in fact a federation of seven emirates each governed by a hereditary emir, certainly knows how to sell itself to the world.
As if to back all of this up, the July figures of the Russell Emerging Markets Index shows the UAE up an incredible 42.1%, way ahead of the Philippines (+5.2%) and Malaysia (+5.2%). They were the top performing country constituents within the index year-to-date as of July 8th, while Brazil (-23.1%), Greece (-18.8%) and South Africa (-17.3%) were the bottom performers for this same time period.
Quoted in a Wall Street Journal article, Gustavo Galindo, emerging markets portfolio manager for Russell Investments, said, “Emerging markets performance has suffered year-to-date relative to developed markets globally. The BRIC (Brazil, Russia, India & China) nations, which are large constituents in the Russell Emerging Markets Index, have faced challenges, notably more mixed economic data out of China where the new political regime looks to establish credibility. And public rioting in Turkey, Brazil and, most recently, Egypt, have contributed to more volatility in these markets.”
And he added, “While emerging markets can present additional risks not found in developed markets, it is important to remember the important role these markets can play within a multi-asset portfolio from a diversification and return perspective. When you are seeking long-term exposure to emerging markets, it is important to work with a global asset manager with the insight and capabilities to help you evaluate these opportunities and put them into a broader multi-asset portfolio context.”
Additional points of interest:
The Russell BRIC Index is down -13.6% year-to-date as of July 8th, compared to a -9.8% return for the Russell Emerging Markets Index and a +16.1% return for the Russell 3000 Index.
Greece, the newest country constituent addition to the Russell Emerging Markets Index, was the bottom performer within the index for July month-to-date, with a -7.7% return.
Interestingly, Egypt, in which recent public riots have led to the ousting of President Mohammed Morsi, has a +13.3% return for July month-to-date.
