* Emerging markets in 2016 reut.rs/1ZKAaO6
* EM stocks tmsnrt.rs/2hn5N02
* EM currencies tmsnrt.rs/2hniYya
* EM dollar bonds tmsnrt.rs/2ih2QQ9
* Global Assets in 2016 tmsnrt.rs/2hncDTn
By Marc Jones
LONDON, Dec 29 Remarkable turnarounds in Brazil
and Russia in 2016 gave many emerging market assets their first
year of positive returns since 2012, on the back of a bounce in
oil and commodity prices.
Although some of the gains have been capped by Donald
Trump's U.S. election win, Brazilian stocks rose almost 60
percent in dollar terms, to be the best performing major equity
market, while the real gained 20 percent,
racing neck-and-neck with the rouble for the top currency spot:
While MSCI's closely followed 23-country index of emerging
market equities is up more than 7 percent, the
commodity rebound, has meant Latin America, especially Peru and
Colombia, have done particularly well.
Hungarian stocks have been eastern Europe's best
performers for a third successive year and Thailand
topped Asia with an 18-percent rise.
On dollar bond markets, default-threatened Venezuela
returned 52 percent, outdoing 9-percent gains on the underlying
sovereign debt index:
"We have seen the recovery in commodity prices, the
understanding that China can take pretty aggressive steps to
stimulate growth in whichever way it feels is appropriate and we
have a had a very accommodative global rates environment,"
Aberdeen Asset Management investment manager Andrew Stanners
"Even the most vulnerable credits like Venezuela that have
been hanging on by their fingernails have been able to find
enough room to survive."
Sovereign debt in emerging and hard currencies has delivered
returns of more than 9 percent, versus zero on U.S. Treasuries:
Emerging market corporate debt has done even better,
returning almost 18 percent.
The recovery has been all the more surprising, given
emerging markets' worst-ever start to the year in January, when
oil prices hit 12-year lows and fears flared that China was
heading for a currency crisis.
Some of those worries remain: the yuan has fallen almost 7
percent against the dollar for its worst year since 1994,
and Chinese mainland shares - star performers last year
- have lost 18 percent.
But by spring, most emerging markets appeared to have
shrugged off that rocky January.
And then came Donald Trump.
Mexico's peso, already struggling due to domestic
worries, was pounded by Trump's ascent and eventual election win
based on campaign threats to scrap trade deals and build a wall
on the U.S.-Mexican border to cut immigration.
The peso's post-election drop has been just over 10 percent.
That has taken it almost 17 percent lower for the year, though
the Turkish lira, hammered by doubts over monetary policy
credibility and instability, has matched those falls.
Since November, MSCI's emerging equity index has lost more
than 6 percent, versus 6-percent gains for the U.S. S&P 500,
while sovereign emerging dollar debt has lost 4 percent.
"It was all looking so good until Nov. 8 and then everything
changed," Rabobank's emerging market strategist Piotr Matys
On the bright side, "Trumponomics" - as the
President-elect's plans to reflate the economy have been dubbed
- may not be entirely negative for emerging markets. Commodity
producers such as Russia and South Africa are likely to benefit.
Investors are betting some recent losers such as Mexico
could stage a comeback in 2017 as bargain hunters step in.
"We should not be surprised if some key emerging market
currencies appreciate from here," fund manager Amundi's head of
macroeconomics, Didier Borowski, said.
"The Korean won, Mexican peso, the Taiwanese dollar, the
Turkish lira, they are clearly undervalued."
(Editing by Louise Ireland)