Stocks in the biggest developing markets lagged behind global equities for a record third year as faster economic growth proves no lure for investors amid concerns over government interference in markets.
The MSCI BRIC Index of shares in Brazil, Russia, India and China rose 11 percent this year through Dec. 28, trailing the MSCI All-Country World Index by 1.6 percentage points. The trend will probably persist in 2013, according to John-Paul Smith, a Deutsche Bank AG strategist. Mutual funds that invest in BRIC nations have posted $1.65 billion of outflows as Brazilian politicians intervened to cut utility rates, China maintained control of its biggest companies and Russian businesses spent shareholder money on projects favored by the government.
The drop in stock trading makes it harder for governments to revive growth.
International investors bought a net $24 billion of the nation’s shares in 2012, the second-most among 10 Asian markets tracked by Bloomberg after Japan.
Policy makers so far have focused on increasing the pool of buyers for Chinese assets, rather than boosting the role of free markets and privately-run companies in the broader economy, Deutsche Bank’s Smith said in a Dec. 3 phone interview.
Shares of Moscow-based Gazprom dropped 16 percent this year even as analysts estimated the company will earn about $38 billion in 2012, making it the world’s most profitable energy producer. The state-run gas-export monopoly is using its cash to finance the industry’s largest capital expenditure program, part of which goes to fund projects favored by President Vladimir Putin.
“It’s not true that we are interventionists, but we have done reforms,” Guido Mantega, Brazil’s finance minister, said in a Dec. 4 interview in the capital, Brasilia. “Some of them hurt and would go against very minority interests.”