Investors having banked on the development of shares or indices in the so-called emerging markets were often disappointed in the recent past.
Although the economy in countries like Brazil, India or China has developed very well, there was not a particularly positive development on the share markets.
The reason for this was mainly the fact that many investors had already bought before which means that the growth prospects were already factored in. Especially in the second half of the past year, investors avoided these markets but now, the emerging markets were able to set a comeback. Of course, this is also important for trading binary options since even short-term predictions for the market trend are only possibly by looking at the long-term trend.
Recognizable turn for the better
Over the last six months, a few negative reports led to the fact that with many stock exchanges in emerging markets, there was a sell atmosphere starting to be prevailing.
The reasons for this were the economic growth in China and India, which turned out to be clearly less than expected, as well as a loss in momentum in Brazil or Russia. Moreover, these reports had an effect on smaller markets, especially the national economy in the area of South Asia and Southeast Asia are strongly depending on exports to China and India.
However, meanwhile, most of the investors have understood that fearing a clear weakening of the growth is without cause.
Leading indicators that have turned out to be positive over the last few weeks again, point to that.
In plain language, this means that the national economies in the emerging markets are growing more again. The most important global index for these markets, the MSCI Emerging Markets, significantly increased towards the end of the year. For the year 2012 as a whole, the index increased by around 14 percent.
China and Brazil as growth engines
Meanwhile, many experts assume that the emerging markets will clearly score better within the next months than the markets in established industry states.
One important reason for this is that many of the shares being traded there still can be purchased relatively cheap despite of the price rally over the past weeks.
Many investors place their hope especially on the development of the Chinese economy. After the change in leadership in November, the country could even develop into a locomotive for the world economy. In the year 2013, the growth of the world economy in China could be clearly more than eight percent, after it has decreased to 7.5 percent in 2012.
A similarly positive development is also expected for Brazil. The growth in the year 2012 was 1.5 percent. For this year, considerably more than the double of that is expected.
At the same time, the base rates were already lowered by much. In addition, the great investments for the Soccer World Cup in the year 2014 and the Olympic Games two years later should provide an additional boost.
In other emerging markets, the picture is also very positive. Only India still bothers the experts, since the growth in the current finance year (until end of March) according to the government’s expectations will probably be only 5.7 percent, i.e. lower than at any time in the last nine years. Nevertheless, the chances on this market are still great, while the volatility of the shares still may stay high- especially interesting for investors trading with binary options.