I go to the max. It is the most appropriate title to describe the state of the art of shares, raw materials, safe haven assets at the end of a roaring year in which the various markets competed to anticipate the reaction to the woes of the pandemic. The trend was fueled by the attitude of central banks, committed to supporting the economic situation together with the various governments. During the crisis, according to the International Monetary Fund, the monetary authorities injected 7.500 trillion dollars to prevent economies from collapsing. The movements of so much liquidity (which sooner or later, pessimists say, will translate into inflation) they are driving the emerging markets rally that promises to last, given the acceleration of cash inflows from managers looking for profitable investments: 95 billion in March, which rose to 243 after four months, reaching 77 billion (37 in equity, 40 in bonds) in November. The prospects are favorable for countries such as Russia and Brazil, oil powers that have so far recorded negative performances during 2019 (respectively -14 and -18%). Furthermore, the end of the pandemic should mark the recovery of tourism with immediate benefits for the Greece (the best stock market in the euro area), the Turkey rather than for Thailand and Malaysia.
In this way theMSCI Emerging Markets index reached its highest level since January 2018, extending its year-to-date performance to +15%. In the last month, while the Chinese Stock Exchange took a break for reflection, while remaining one of the best in the world in terms of performance on an annual basis, the upward movement was joined by the rally of other important emerging stock markets: Brazil above all with a formidable +13%, followed by Indonesia +8%, South Korea +7%, India +6%, Taiwan and Malaysia +4%.
Shanghai and Shenzhen, however, have already started running again. Perhaps, as noted by the Nikkei Times, the slowdown following the cancellation of the Ant IPO has political reasons. President Xi, who is in office for life, has acknowledged that only the big names in China's new economy, Alibaba and Tencent in particular, have the economic (and potentially political) strength to challenge his absolute power. Hence a phase of tensions that has now been overcome. And so the CSI 300 index closed the fourth positive session in a row with an increase of 1,3% and bullied back beyond the threshold of 5 thousand points that it had lost at the beginning of the week. At this pace, December could become the third positive month in a row, the sixth of the last seven. The performance since the beginning of the year for an investor in euro is close to +20%.
If the trend is confirmed, the effect on the recovery of raw materials would be evident, starting with oil, which has risen above the 50 dollar threshold. China's oil demand could peak at 740 million tonnes annually in 2025 before gradually declining to 310 million tonnes annually by 2050 under the carbon neutrality scenario. But even more significant is the rise in copper which on Friday reached a price of 8 thousand dollars a ton, with an increase of 70 percent since the beginning of the year. But even in this case the rally may have just begun: the goal is $10, the price already reached in 2011, a target within reach if one thinks of the increase in consumption linked to the boom in the green economy and the diffusion of the electric car.
