Tuesday, February 21, 2012

Today's Major Market Move: Panamanian Stock Market Up 37% Since Beginning of 2011

It would be convenient to talk about the ongoing saga in Europe almost every day but in the name of variety we're going to focus on a different part of the world. The two best performing equity markets on the planet since January 2011 are: #1 Venezuela (last discussed on Feb 4th) and #2 Mongolia (last discussed on Dec 1st, 2011). For today we're going to move one more spot down on the list to third, which happens to be occupied by Panama. The Panamanian benchmark equity index (Bolsa de Panama General) is up over 37% since Jan 1st, 2011. Here's the top ten:

Click here to go to the live table.

To be frank, we haven't been able to identify specific reasons for the exceptional performance of Panama's equity market. They haven't engineered their success through currency devaluation since they utilize the US Dollar and the dollar is basically flat over that time frame, having strengthened against 64 out of 120 currencies that we track. One might suspect that increased canal traffic and/or canal rates might have provided a boost but if we use the Baltic Dry Index as a proxy, we would highly doubt that canal related business has increased significantly (chart courtesy of Bloomberg):

Click here to go to the live chart on Bloomberg.
Equity index performance is tracking fairly closely with GDP growth (depending on how over/under valued equities were relative to GDP back in 2007) and if GDP estimates are anywhere near accurate, Panamanian equities should continue to perform nicely over the next few years.

Click here to go to the live chart.

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