Thursday, March 01, 2001

Emerging Markets Come Out on Top

Emerging Markets Come Out on Top
Alternative Investment News
Performance Roundup
By Pamela Appea
March 2001

Emerging markets came out on top in January, reversing last year’s slump, when they were one of the worst performers.

Emerging market managers primarily benefited from the U.S. Federal Reserve board’s interest rate cute in early January, coupled with the issuance of Eurobonds by emerging countries. At the same time, the bound in the Nasdaq Stock Market helped to boost the sector’s performance, said managers and consultants.

The CSFB/Tremont Index reported emerging market manages returned 4.3% up from 2.3% in December. The Hennessee Hedge Fund Index showed emerging markets up 6.36% and Van Hedge Fund Advisors reported a 15.1% gain the month of January.

This is a considerable improvement from last year, when emerging markets ranked 20 out of 22 in Hennessee’s index.

The rate cut helped emerging markets by reducing interest rates, which stimulated bond markets in the domestic and Eurobond markets.

Issuance of Eurobonds by Brazil, Mexico and Colombia and new capital flows into the sector, helped to boost performance.

James Edward, a head trader at Paris-based hedge fund Barep Asset Management, a subsidiary of Societe Generale Group, said, “There were definite new capital flows, and as our market is a very small market, it makes a significant difference.”

He also noted the rebound in the Nasdaq, and the rebound of swap spreads also contributed to the emerging markets sector’s positive performance.