The top 5 stock markets in the world have delivered very solid performances and I have to admit that stock market performance is not entirely connected with the stock market price and the size of the countries economies. At least not when you look the absolute figures. You will find that these stock markets are not the major players, but they are actually based in emerging economies.
Research has shown that the best performing markets are those in countries that are least affected by the climate and the trends in the biggest markets and the biggest economies. Most of these emerging stock markets do have good local economies for their size and development and they are quickly proving that they know how to trade. Last year’s top stock markets was very small when it comes to liquidity and volume, but the current gains are garnering attention from foreign investors, rating agencies and fund managers.
Year to date gains in Africa’s second largest economy continues to grow and this year Nigeria’s stock market experienced a 31% gain. Improved financial stability and the commitment of the government to reform the banking industry gives a “thumbs up” to Nigeria as an emerging stock market.Yet, there is still high political unrest, confusion and violence that may keep investors away from Nigerian stock markets.
Pakistan experienced a 33% gain in 2012 and a healthy volume is continuing to soar. This is due to State Bank of Pakistan’s easing of monetary policies. The key interest rate in Pakistan’s has been cut to 10% down from 12% at the end of 2012. Lower than expected inflation figures and inflation trending lower will cause Pakistan’s central bank to further cut economic interest rates.
Turkey is the one positive spot in an otherwise gloomy European economy. Turkey’s economic growth is slow but there has been no recession thanks to very strong exports. Fitch Rating lifted Turkey’s credit rating to investment grade which sent the Istanbul stock exchange to record highs. Year to date gains (end of 2012) for Turkey are at 43%.
After tumbling more than 50% in 2011, Egypt’s stock market has gained back this 50% plus five additional percentage points due to this country’s first free presidential election. The political situation in Egypt is still very dark, but the market is beginning to come alive. Investors are still a bit skeptical, but a 55% gain at the end of 2012 give Egypt a step up in the markets. It can only be hoped that the Egyptian government will soon decide on the type of laws it will embrace.
The top stock market in the world is, surprisingly Venezuela. With a 219% gain in 2012 this somewhat shady country staged a huge rally in the Caracas stock exchange. The gains are largely due to Venezuelan banks enjoying larger shares. Even though this high gain has put Venezuela at the top of emerging stock markets, investors are still cautioned to watch the markets due to the government’s non-support of free enterprise.
Venezuela, Egypt, Turkey, Pakistan and Nigeria are rated as the 5 hottest stock exchanges for 2012, yet these countries remain chaotic due to political and labor unrest.