2016 Stock Markets – Best opportunities not in the U.S.


Seeking Alpha – December 29, 2016

  • Top performing markets have been external despite the post-election rally in U.S. stocks
  • Best performing stock markets: South America and commodity-based economies

In the last two months of 2016, much of the financial news has revolved around the rally in US stocks after the November 8th presidential election. While U.S. stocks were up for the year before the election, they were not world leaders. Even after the end of the year rally, they still weren’t. Nevertheless, the number of stock markets outside the U.S. that significantly outperformed the S&P 500 was smaller than it was at the end of the third quarter. Top performing markets in 2016 were Brazil, Peru and Russia. South America, which had led all year, was the top performing region. Europe was at the bottom, with no stock markets doing better than the U.S.

South America’s stock markets had a truly impressive record in 2016. While the Venezuelan market (the IBVC index) had the biggest moves, being down as much as 20% and up as much as 160% during the year, massive inflation (some estimates putting it over 400%) is driving the market. Fortunately, there is no ETF for Venezuela, so it is easy for investors to avoid it, as they should. Two South America markets – Brazil (NYSEARCA:EWZ) and Peru (NYSEARCA:EPU) – are much better choices than Venezuela. Both are up around 60% in 2016, or more than four times as much as is the S&P 500. Argentinean (NYSEARCA:ARGT) and Columbian (NYSEARCA:GXG) stocks are up in the 25%-30% range for the year, also well above the approximately 14% rally for the S&P 500. Inflation in Argentina also is high, estimated by the government at 35%, so its market performance is not that impressive. Stocks in Chile (NYSEARCA:ECH) have rallied about the same as stocks in the United States. Latin American neighbor Mexico (NYSEARCA:EWW) saw a big drop in its stocks in November because of the election, and its market is closed down about 10% in 2016.



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