BRICs are expected to deliver good performance in 2013, following on from the gradual improvement that has been seen since September 2012, ING Investment Management has predicated.

The growth deceleration in China, corruption scandals in India and government intervention in the economy in Russia and Brazil are the main reasons why the BRIC markets have been lagging heavily behind the rest of the emerging world for three years now. In the meantime, economic conditions in many of the other emerging countries have deteriorated sharply, and stocks in the best-performing markets have become very expensive over the past years. Indonesia, the Philippines and Mexico offer the clearest examples.

“However, the BRIC markets have been faring slightly better again since last September. China and India in particular are doing well. There is now a much better chance that the four markets, which together account for nearly half of the global emerging equity market, will turn in good performances in 2013. The prospects for each of them have improved, and one can also make a good case for these markets simply because they are large and mainstream. The outlook for emerging markets as a whole has improved significantly now that the world economy and China in particular are showing clear signs of recovery. Once the ‘emerging markets’ category is attracting more interest from investors again, the large, well-known markets will benefit especially. For that reason, South Korea should also prove very promising in the coming year,” ING Investment Management senior emerging market strategist Maarten-Jan Bakkum explained.

According to Bakkum, along with the technical reasons for improvement there are more fundamental reasons, such as the upswing in Chinese economic growth. This upswing is at least as important for Brazil and Russia, the emerging world’s two largest commodity exporters, so there should be considerable scope for both Russian and Brazilian stocks to benefit from the accelerating Chinese economic growth.

While India is not as sensitive to the effects of China, it has seen economic growth start to recover, Bakkum added.

Share Story: