'China, India among worst performing stock markets of 2008' : ET

'China, India among worst performing stock markets of 2008'

NEW YORK: India and China, two of the investors' biggest darlings not so long ago, are among the world's worst-performing stock markets this year, says the Wall Street Journal (WSJ). Indian shares are down 28 percent this year as of Friday, clearly a bear phase. Chinese stocks have faced a worst fate - tumbling 46 percent, the WSJ reported on Monday.

Both countries started 2008 with stocks trading at expensive levels, leaving them vulnerable to a correction. While economic growth goes on apace in the two countries, it is not expected to match last year's superb performance. Growth could be further dented because investors are increasingly anxious about rising inflation and government efforts to stem it. June is likely to witness the fifth monthly loss in six months for a deeply depressed Chinese stock market that has seen some $2 trillion in market value evaporate since January.

Down by more than half from its peak, the Shanghai Composite Index is trading at levels last seen in early 2007. Many international investors are bearish, too, on India and China. "Neither is looking outstandingly attractive, but they're starting to get back in touch with reality," Allan Conway, who manages $23 billion in emerging-market shares for Schroders in London, was quoted as saying by the WSJ. Shares in India are trading at about 17 times their 2008 earnings, according to UBS estimates, as are Chinese shares in which foreigners invest.

Foreign investors have pulled a net total of more than $5.5 billion out of Indian stocks this year, according to Standard Chartered Bank. China's domestic stock market remains almost entirely closed to foreigners, whose investment is limited to a quota of about $10 billion. Foreigners can also buy some big Chinese shares in Hong Kong, where the Hang Seng index is down 18 percent this year. In a sign that not all emerging markets can be lumped together, stocks in Brazil and Russia have, however, held up relatively well, the WSJ said.

Even the US stocks haven't fared as badly as India and China, despite mounting pressure from credit crisis and rising oil prices - the Dow Jones Industrial Average is down 11 percent this year. Still, markets in India and China remain much higher than they were a few years ago, the business daily reported. India is still up 55 percent from the start of 2006, but it has its own concerns. If 2007 was a bumper year for India initial public offerings (IPO), these days such deals are getting a cold reception. Since the listing of Reliance Power, India's biggest IPO, the market has turned sour and other high-profile IPOs have been shelved. In China, the Shanghai index is still at double its July 2005 level, so some investors remain in good shape.

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