1. Venezuela IBC: 302.8%
Venezuela’s abysmal inflation rate, which stood at 19.9 percent, is helping to juice stocks. A massive increase in government spending in the run-up to October’s presidential elections spurred consumption.
2. Turkey XU100: 53.3%
Hot inflows of $15 to $20 billion in foreign direct investment have fueled this market’s growth. As well, after 18 years, Fitch’s recent upgrade has returned Turkey to investment grade territory.
3. Egypt EGX 30: 49.6%
Egypt’s stocks have done well in spite of a bleak economic backdrop and volatility spurred by political unrest. Its exceptional YTD return in 2012 is primarily due to a ’bounce-back’ effect, as the market tumbled in the last few months of 2011.
4. Pakistan KSE: 49.3%
The Karachi Stock Exchange has tripled in value since 2008, and could soon eclipse 17,000. Analyst Zaheer Ahmed claims that foreign investors seeking a better return have flocked to Pakistani stocks.
5. Kenya NSE: 39.3%
In late 2011, Samuel Gichoci, senior research analyst at NIC Securities, outlined the preconditions that would foster the market’s rapid rise:
The Nairobi Stock Exchange (NSE) is currently a buyer’s market which presents foreign investors with massive bargain opportunities. This situation is a result of various factors that have converged to push stock prices to levels that are out of whack with the fundamentals on the ground. These factors include a weakening currency (which has finally begun to stabilize), escalating fuel prices, a surge in local liquidity prompted by heavy bank lending to the private sector…
Turns out, he was right. Foreign inflows have provided an impetus for strong performance. This is best represented by Equity Bank, the best performing stock since 2006, in which foreign investors have increased their holdings and now own nearly 50 percent of the stock.
6. Estonia Tallinn OMX: 38.2%
2012 was a bounce-back year for Estonia after the market fell in the closing months of 2011. The nation and its well-capitalized banks enjoy top-notch credit ratings, and the investment climate is extremely friendly to foreign investors, who are “guaranteed a level playing field.”
Source: Estonia.eu
7. Thailand SET: 35.8%
In 2012, the SET closed above 1,400 for the first time since 1996. The stellar performance of the exchange is attributed to “hot money” inflows from quantitative easing, as foreign investors piled 76 billion (Bt) into the market this year.
Sources: Bangkok Post, Nation Multimedia
8. Laos Composite: 35.1%
This exchange, which features just two stocks, will soon introduce online trading to increase liquidity and volumes. Amazingly, Laos has achieved superior growth despite a minuscule amount of foreign direct investment – only $450 million (USD).
Sources: Bloomberg, Emerging Frontiers Blog
9. Nigerian Stock Exchange: 34.4%
This stock market absolutely blew by expectations. At the beginning of the year, analysts from three of the top investment banks projected a YTD return of under 15 percent. The introduction of market-making in mid-September helped stimulate the market and reduce volatility.
Source: All Africa
10. Philippines PSE: 33.0%
The Philippine economy is growing at a healthy 5.5 percent rate. It’s stock market has taken steps to become more world class, including extending its trading hours.
Jun Calaycay, investment analyst at Accord Capital says the PSE is cheap relative to other neighboring Asian markets: its trading value is 73 percent of GDP, which compares favorably to Singapore’s 128 percent and Hong Kong’s 365 percent