Bull or bear market ahead in 2011?

András Loncsák
Equity Division Head

The revival of the stock market in 2009 – with equity-market yields of more than 20% – has not been followed by a further upswing this year. Despite two lengthy periods of optimism (in February-April, when the S&P500 rose 15%, and in September-November, when it rose 17%), a breakthrough is yet to come in the stock-market indices of developed markets, most of which are fluctuating within a band of around 15% at present. This is in contrast to a number of emerging markets, which have succeeded in reaching new heights (as in the case of Turkey and Indonesia), or which have approached their highest historical values (as in Brazil, South Korea and India).
As regards the source of economic growth, no great change is expected in 2011. Developing countries will account for the bulk of growth in the global economy. Current expectations are that the BRIC countries (Brazil, Russia, India and China), following this year’s 4-10% growth, may expand by a similar extent next year, while developed economies, burdened by high levels of both public and household debt, will continue to produce slower growth (1.7- 3%). An expansion of 2-3.5% is expected in the Visegrád countries in 2011, falling short of the average of the developing economies.


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