Emerging markets climb in equity value

Bloomberg

The 22 nations classified as "emerging" by index provider MSCI comprise 24 percent of world market capitalization, up from 18 percent at the start of this year, the highest proportion since Bloomberg began compiling the data in 2003.

The increase signals growing confidence in developing countries as investors redeploy cash into equities after the worst losses last year since the Great Depression. Stocks rallied from Sao Paulo to Shanghai in 2009 as governments led by China cut interest rates and enacted stimulus plans to cushion their economies from a collapse in exports. The MSCI Emerging Markets Index jumped 35 percent, while the MSCI World Index of developed economies added 2.9 percent.

"Everyone is trying to jump on that bandwagon," said Nicholas Field, who helps manage about $11 billion in emerging-market stocks at Schroders in London. "There are projects in emerging markets in which I can make more money than I can in the West at the moment."

Developing economies will probably expand 1.6 percent as a group this year and 4 percent in 2010, according to the International Monetary Fund. Developed nations will contract 3.8 percent in 2009 and have zero growth next year, the IMF forecast in its April World Economic Outlook report.