Research & Insight

The MSCI Emerging Market Index fell 27.6% during 4Q, 2008. On a brighter note, the quarter started much worse than it ended. By the third week of October (24/10/2008) emerging market equities had already fallen over 40%. The collapse of a few major financial institutions in the US and Europe led to a complete shut down of global credit markets, triggering this sharp fall in equities. The fear of a prolonged meltdown of the global financial system and its catastrophic consequences on global economies prompted aggressive responses from central banks and governments. More specifically, governments co-ordinated a range of unprecedented global fiscal stimulus packages in combination with central banks moving interest rates to historically low levels. The announced measures, along with the governments’ intent on continuing with these measures until they gain traction, put the majority of investors in a better mood. As a result, a mild resumption of risk appetite, falling volatility and declining credit spreads led to a strong recovery from October’s lows and a subsequent stabilisation of equity markets during the month of November and December.

Satyam (Sanskrit for 'truth') Computer Services Ltd. was founded by B. Ramalinga Raju in 1987. The company offers information technology (IT) services spanning various sectors and is listed on the Mumbai and National Stock Exchanges in Mumbai, and the New York Stock Exchange.

Investors hunting for opportunities in 2009 should consider the valuation gulf that has opened up between hard currency developed market sovereign bonds and those of emerging markets.

I may be too simplistic, or it is too early to say, but looking at the current market movement and FX rate, it appears as though a good opportunity should soon be emerging in the Korean market (both the stock market and the currency) for the long term. I have also encountered those who have a similar opinion and have put together some data to support our view.