The small rise in most emerging market equities over the past month was eclipsed by the 4% or so rise in developed market equities. So far in 2013, emerging equity markets have underperformed developed markets by over 15%. This is a greater degree of underperformance than seen during the global financial crisis of 2008 and is similar to that seen during the 2000 stock market crash. We do not expect it to persist next year as the Fed should tread carefully in scaling back stimulus and economic growth in emerging economies is likely to remain stronger than in developed markets.
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