Brazilian shares were punished by the sudden pullback in the world’s emerging markets, falling 3.7%. Once again, traders in Brasilia seemed content to react to macro developments elsewhere while waiting for the incoming Dilma Rousseff administration to provide direction on how Brazilian monetary policy will work in the new year.
Russian shares were flat as new flows into Moscow balanced out a worldwide move away from risk in all its forms. Russia is emerging as a new darling of emerging markets traders . . . or at least one of the least risky of the BRIC quartet at the moment.
Indian stocks fell 2.3%. The threat of the Chinese food inflation story playing out on the other side of the Himalayas did little to encourage new money into the Mumbai market. Instead, given the recent record-breaking rally in India, traders were inclined to take a bit of cash off the table and wait for global risk factors to resolve.
Chinese markets ended the week flat, but are still down 8.7% from their recent peaks. The absence of a formal anti-inflationary campaign from Beijing made traders more nervous, if anything: a quick move would be easy to adjust to and move on, but the longer the markets dread a set of new lending curbs, price controls or even another surprise interest rate hike, the more time Chinese stocks have to drift.