There’s a whole lot of stress-testing going on these days in the capital markets. And one of the striking lessons is that emerging markets have proven to be far more durable than many investors, including yours truly, thought possible. Yes, the durability could evaporate tomorrow for all we know. But for the moment, it’s hard not to be impressed by the resiliency of equities in the developing world.
Consider the table below, which compares the major asset classes and ranks performance by May 2008 total returns. Once again, emerging markets were the clear winner, rising by more than 3% last month. Other than commodities, emerging markets equities are comfortably in the lead for the past year through May 31, 2008 as well.
Yes, there have been some tough spots along the way, as there inevitably are for all the major asset classes. This year’s January and March were especially hard on equities in emerging markets, which suffered dramatic declines in those months. Nonetheless, it’s hard to overlook the fact that despite all the turmoil in the global economy–from wars to price shocks in energy and food to various political and weather-related disturbance–this slice of the world’s stocks has held up remarkably well.