BRIC Investors Lose Their Taste for Stocks

Indian investor Nirav Vora had 2.5 million rupees ($45,984) in the Indian stock market six years ago. Today that figure is down by 75 percent after investment losses and withdrawals. Now the 39-year-old father of two in Mumbai, who depends on investment income for his livelihood, is plowing money into government bonds. “The confidence of small investors is rock bottom,” Vora says. “They have no faith in the markets.”

Disappointing economic growth and corporate profits have stocks in the BRIC nations—Brazil, Russia, India, and China—trailing global shares for a fourth year. While the Dow Jones industrial average is trading at an all-time high, the MSCI BRIC Index remains 37 percent below its 2007 peak. Emerging economies “are inherently and structurally more volatile,” says Jagannadham Thunuguntla, chief strategist at New Delhi-based SMC Global Securities. Investors should “realize that bumps on the way are not the exception, they are just the norm.”