Think back to all that bullishness over emerging markets from last fall, especially among the pros. Every single brokerage and adviser conference produced a consensus notion on how EM and commodities were a no-brainer for 2011.
But with emerging markets nations fighting off the number one export of the US, inflation, it became obvious to anyone with a brain that the EM equities trade wasn’t going to work, nor would the industrial commodities like copper and steel.
Anyway, get a load of these stats from Bloomberg on how the Shanghai Composite has fared so far this year:
The Shanghai gauge has dropped 9.7 percent this year as the central bank raised interest rates five times and ordered lenders to set aside more cash as deposit reserves 12 times since the start of 2010 to contain inflation that quickened to the fastest pace in three years last month. The measure is valued at 11.6 times estimated earnings, the lowest since Bloomberg began to track the data in 2006, according to weekly data compiled by Bloomberg.
And I still wouldn’t buy it.