The price of oil has increased 23% this year.  This has hurt India most, given it is a net importer, which has caused a drag on its economy and currency. On the other hand, Russia does not complain, being the largest oil producer in the world.  Russia currently produces around 10.5 million barrels of oil per day followed by Saudi Arabia’s 10 million and the United States’ 9.2 million barrels per day.

Tough rhetoric from Donald Trump has resulted in negativism for emerging markets this quarter and for the year as a whole.  In India, foreign investors pulled out nearly $4 billion thus far this year but thankfully domestic investors made up for it by investing approximately $11 billion. Domestic investors invested even more during the September sell-off.

The quarter ended badly for China as there has been a further escalation of the trade conflict between China and the US, resulting in the third imposed 10% tariff on $200 billion of Chinese goods taking effect. The tariffs, currently totaling $250 billion, are anticipated to increase even further in 2019 due to a higher rate, that of 25%.

In Russia, the market experienced a fall of 13% after US lawmakers proposed “the sanctions bill from hell” in reprisal for alleged Russian meddling in US elections. This includes limits on trading new Russian government bonds and additional sanctions on the seven largest Russian banks. Despite the bill being a long way from becoming effective, it was enough to send the Russian market into free fall because a lot of investors were concerned about the threat of sanctions and thus started selling off Russian assets. The Russian currency also lost 11% during the same period.

On a positive note, all three economies are strong. Russell, a large indexation company, will include Chinese A shares (domestically listed stocks) in its major emerging markets index next year. Russia makes a lot of money on strong energy prices and India is the fastest growing large economy in the world. 

Domicile: Malta Source: Bloomberg