Utilities, Precious Metals, Real Estate, Canada, France are among the worst

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We are publishing the second issue of our emerging market strategy on the eve of the G20 meeting in Brisbane. Its been a sunset for the emerging markets in the past 5 years. It looks like GEMs ripped easy profits in the first 20 years following their market liberalisation. But they are now facing much more tedious period that requires fine tuning, structural reforms, political liberalisation as well as intense social capital creation. Politics has also been a dampening factor for emerging markets. Problems in eastern Ukraine and Russian sanctions will take its toll on global and especially european growth. Meanwhile Russian president supported by pocket oligarchs, continued to play a buffoon and backing up forces and that destabilise in eastern Ukraine. While Ukrainian oligarchs opposing Russians look even more childish. While Ukraine conflict knocked out chunky value from Russian, and Ukrainian assets. IS has been a dampening factor Turkish assets prices. While it looks like Turkey was able to pinpoint a strategy to maneuver through IS crisis. Oil price drop however, if proves sustainable, provides more stimulus to importers so Europe as well as emerging market energy importers such as Turkey, Korea and China are set to benefit. Meanwhile with the financial armory that was developed already the BRICKST (Brazil, Russia, China, Korea, South Africa and Turkey) started to play far more important role on the international capital markets. The latest switch by Russia to drop managed currency policy and steps by China to liberalise its market access highlights another trend that BRICST central banks just like the ECB or the FED will become more important in contributing to global liquidity and not just when investing their reserves but also in providing local currency credit. Russian economic growth has been so far saved by weaker currency and the fall of managed currency policy .. Brazil markets tanked on the news of Dilma Rousseff reelection, reflecting perhaps on the investors future attitude towards Brazil. With old new president in Brazil, things are likely to be more predictable following the trends of the past 4 years. Brazil has been struggling with sluggish growth and rising prices. China, feels still pretty risky, although recent dollar strength as well as drop in oil prices probably has helped to make China case slightly better. If oil prices continue its fall, China as the worlds largest importer is likely to benefit. South Africa markets have been performing okay this year, slightly better than overall GEM benchmark. But we think that small outperformance could evaporate towards the year end. India remained an outlier to the emerging markets along side with Turkey actually, performing strongly when most of the other GEM stocks tanked. New Indian PM Narendra Modi has been putting together government, appointing various officials to various roles. Korea just like other energy importers Turkey, India and China has benefited from drop in oil prices. If the drop proves sustainable during the 4th quarter, Korea is likely to benefit. Turkish market was one of the best performing equity markets in October, rebounding strongly last month after miserable performance in September. It has all means to maintain its outperformance into the year end.