Monetary Policy Report submitted to the Congress on February 27, 2008, pursuant to section 2B of the Federal Reserve Act
Figure of equity indexes in selected emerging-market economies, 2006-08. Data are plotted as three curves and are expressed as indexes (the week ending January 6, 2006 = 100). Over the period, the curve for Latin America and that for emerging Asia track each other closely; most of the time, the curve for Latin America stays above that for emerging Asia. Both curves begin at 100 on January 6, 2006, and steadily increase to a peak of about 120 in mid-May. From about mid-May to mid-June, both curves decline to around 100. They then climb steadily until late February 2007--to about 140 for Latin America and 130 for emerging Asia. Both curves dip about 10 index points between late February and the first week of March, and then both increase very steadily, peaking around the third week of July at roughly 180 for Latin America and roughly 160 for emerging Asia. From the third week of July to about the third week of August, the curve for Latin America decreases to about 150, and that for emerging Asia decreases to about 140. From late August to about the first week of November, the curve for Latin America and that for emerging Asia climb to peaks of about 200 and 190, respectively, before dipping to about 185 and 170 by the end of November. Both curves remain within roughly 10 index points of these levels until about the second week of January 2008, when they both decline about 20 index points over the rest of that month. The curve for Latin America increases sharply during February, rising to around 200, while the curve for emerging Asia increases modestly in that month, rising to around 160. The curve for China starts at 100 on January 9, 2006, and is indistinguishable from the curves for emerging Asia and Latin America until around the second week of May, when it reaches 120. At this point, the curves for emerging Asia and Latin America drop off, as discussed earlier, and the curve for China continues to rise. The curve for China fluctuates between 130 and 140 from around the second week of May to September 1 before increasing to a peak of about 250 around the third week of February 2007. The curve fluctuates around this value for about a month before ascending again. From mid-June to early July, the curve fluctuates between the values of roughly 350 and 315. From early July to late October, the curve rises steeply to roughly 500 and hovers near there for about two weeks before dropping back to almost 400 by the end of November. In the second week of January 2008, the curve reaches a peak of around 450 before dropping to hover at around 375 from February 1 through the end of the period.
Note: The data are weekly. The last observation for each series is the average for February 18 through February 21, 2008. For the Latin American and emerging Asian groups, each economy's index weight is its market capitalization as a share of the group's total. The Latin American economies are Argentina, Brazil, Chile, Colombia, Mexico, and Peru. The emerging Asian economies are China, India, Indonesia, Malaysia, Pakistan, the Philippines, South Korea, Taiwan, and Thailand.
Source: For Latin America and emerging Asia, Morgan Stanley Capital International (MSCI) index; for China, Shanghai composite index, as reported by Bloomberg.