Brazil, Russia best performing bourses in 2016

2016 saw the stock exchanges of Brazil and Russia dominating as the best performers, defying expectations amid geopolitical tensions and political transformations in both countries. Despite concerns surrounding emerging markets, Old Mutual remains optimistic about the future of stocks and currencies within this sector. Economist Tenhiko Ingrania explained that the recovery in commodity prices played a significant role in the positive performance of emerging markets. The synchronized upturn in global growth has bolstered the export volumes, benefiting these markets. Additionally, the stability of the dollar is crucial, with the expectation that it may weaken in 2018, supporting emerging market currencies. In terms of politics, uncertainties in developed markets can impact investor confidence and spill over to emerging markets. While political stability in some emerging market countries is reassuring, the uncertainty in developed markets poses challenges. Moving forward, the key risks for emerging markets lie in the behavior of the dollar and the developments in China. Any slowdown in China's demand or an increase in commodity supply could undermine the recovery in commodity prices, thus posing significant risks to commodity exporting countries like Russia, Brazil, and South Africa.