The Stock Market in March

There have been eleven business days through March 15th, of which the Ibovespa has
risen on six and fallen in five. The good news is that the rises were much greater than the
falls, and the index ended 3.8% up for the month. However, due to the volatility of
markets this year, the Ibovespa is up only 0.6% for the year as a whole (The Morgan
Stanley Emerging Markets Index (MXEF), is down 0.6% for the year.)

Figure 1 shows the relative performance of six diverse stock markets using the closing
index of 2009 as 100 for all indices. The indices chosen were the Dow Jones Industrial
Average (“DJI”), and the Standard and Poors 500 (“S&P 500”) of the USA, the Financial
Times and London Stock Exchange 100 Index (“FTSE 100”) of the United Kingdom,
The Cotation Assistee en Continu 40 (“CAC 40”) of France, China`s Hang Seng Index
(“HSI”), and Brazil`s Indice da Bolsa de Valores de Sao Paulo (“Ibovespa”).

Figure 1.
Sock Market Performance, 2010
110.0%

105.0%

100.0%

95.0%

90.0%

85.0%
12

1/

1/

1/

1/

2/

2/

2/

2/

3/

3/
11
7/

14

21

28

4/

11

18

25

4/
/3

20

20

20
/2

/2

/2
1/

/2

/2

/2

/2
20

10

01

01

01

10

01

01

01

10

01
0

0
09

DJI FTSE CAC HSI IBOV S&P

The six markets chosen all have traded up in the month of March due partially to the
weakness in the US Dollar, and the lack of any significant bad economic news. Due to
relatively good new in the UK, the FTSE has taken a leading role with a high of 4.2%
over its year end close but which had slipped back to 3.3% as of March 15th. The FT
surge has, and continues to be driven by substantial real and possible transactions
including Kraft`s US$ 19.6 billion purchase of Cadbury, KKR`s approach to Arriva, and
Prudential`s US$ 35.5 billion acquisition of AIA. As predicted by many market watchers,
the US Dollar indices have also done well as funds have flowed back to the USA based
upon limited expectations in emerging markets. The DJI is 2.1% above its year end close,
and the S&P is up 3.2%. As mentioned above, the Ibovespa is the only other index in
positive territory. The CAC 40 is 1.2% down for the year, and the Hang Seng is 3.6%
down based upon continuing inflation concerns.

The Ibovespa has been struggling to maintain a level of 70.000, but investors have just
not had the persistence to close at above that level. The index, however, is above 70,000
as I write (March 17th). The indications that interest rates will not go higher in the USA
just yet, meaning that the dollar will continue weak, has been the major force driving the
Ibovespa higher.