Which Markets Are Hot Off The Blocks So Far In 2010 (12 Jan 2010)

Guess which market is the strongest so far off the blocks in this new year? Most of you won’t get it, I didn’t expect it myself. But it’s the Turkey market. The only Turley equity fund we have is currently up 7.4% year to date, which is quiet impressive considering most funds are only up 1 to 2% since the start of the year.

Why are we looking at such a short time frame? Its barely one week since the year started in terms of business days. I find it interesting because we are at the start of the new year. Certain markets which surge ahead of others could indicate how certain trends will form for the rest of the year. Do note that the information I am posting is just based on the preliminary trends of markets in the very first week of 2010. It is possible that other trends may appear overtake the current leaders. There is certainly no guarantee that the strongest performers at the start of the year will continue on to be the best performers in that given year. But for now, it is still interesting to look at who was quickest off the block in 2010.

Will Turkey end up being best performing market for 2010? Still very hard to say, but at least at the start of the year, it is going strong. Here’s how the rest of the funds by category (not exhaustive) have performed in the one week since January 2010 started. 

Fund Category	Performance
Turkey	7.39
Gold	6.14
Resources	5.9
Materials	4.17
Indonesia	3.97
Energy	3.82
Latin America	3.41
Global Agribusiness	3.37
Global finance	3.29
Eastern Europe	3.29
Malaysia	3.16
Singapore small cap	2.72
Brazil	2.7
Emerging Europe	2.28
India	2.2
Korea	2.13
BRIC	1.73
Asia ex Jap	1.59
Middle East/Africa	1.57
Europe inc UK	1.52
Greater China	0.92
Tech	0.8
Singapore	0.75
Healthcare	0.43
Property	-0.25

Now, this is by no means predictive. One year is a long time. But if we assume that the trends that people latch on to at the start of the year are going to carry through to the rest of the year, these numbers tell us a few things.

Firstly, that commodities, especially hard commodities will continue to have strong momentum. After Turkey, the funds with the strongest starts were gold, resource, and materials equities funds. These are all funds investing mainly into hard commodities. Are people still worried about inflation? Are people still wary that markets might collapse?

I don’t think its that. Most funds are off to a positive start, so many more people generally positive that this year will be good. But inflation, which has been low, is expected to pick up, and globally, trade is expected to increase as well, which means demand for raw materials like metals, will go up. This is probably why these funds are off to a great start for 2010. The same goes for energy funds. With oil prices off to a strong start at the beginning of the year, energy funds did well. Amongst sectoral funds, global finance funds and global agribusiness funds have also been strong at the start of the year.

Indonesia continue to be have really strong momentum. Despite being one of the strongest markets last year, it is off to a strong start this year as well. Valuations are already higher due to the strong run up, but it appears that momentum will continue to be strong in this market.

Emerging markets, in particular Latin America and Eastern Europe are the quickest off the blocks at the start of 2010. The Latin America funds are up 3.4% and the Eastern Europe funds are up 3.3% on average, And this is higher than the Asia excluding Japan funds which are only up 1.59% at this point. Again, I stress that it is too early to tell, and these are just based on the first week numbers of 2010. Nevertheless, could this be a case where other emerging market countries outside of Asia are increasingly coming under the spotlight? Asia excluding Japan, is after all a much more closely followed market with many well known exciting stories like China and India. But there could be a trend of investors diversifying their investments across all of emerging markets instead of just China and India. Time will tell.

The last interesting trend to note is that so far, just based on the initial performances of funds in 2010, the Singapore small cap category has done better than the generic Singapore equity funds category. There is some basis in this. Blue chips were the first to move last year, and many of the small caps have not really risen much in comparison to the blue chips in Singapore. As confidence recovers, we may see more of the small caps outperforming the blue chips. I am seriously considering shifting up to half of my Singapore equity fund into a Singapore small cap fund.

That’s all the thoughts for today. This will be an exciting year, and I have no doubt there will be new trends and changes during the year as it progresses. So, I will have updates.