Outside of Europe, there were a few hot markets in the world in the first half of 1998.
A very few.
The tiny Costa Rican market, for example, soared 64% in the half. Panama's market surged 60%.
But in the rest of Latin America, the story got worse as the half wore on. Worries that Asia's economic debacle would infect Latin countries put pressure on their currencies and forced many countries to boost interest rates sharply to avert capital flight.
Result: Mexico's key index tumbled 17% in peso terms in the second quarter, bringing its first-half loss to 20%, through Monday.
Take into account the peso's slump to record lows by last week, and for U.S. investors the loss in the Mexican market in the first half amounted to a steep 29%.
Equity markets in Brazil, Venezuela and Argentina also were hammered in the quarter.
Latin American corporate earnings are expected to grow only about 1% this year, down from 20% in 1997, as high interest rates and tougher Asian competition bite, according to brokerage Salomon Smith Barney.
In beleaguered Asia, meanwhile, the optimism that sent markets rebounding in the first quarter after last year's plunge proved premature. Most Asian markets suffered deep declines in the second quarter as investors began to tally the extent of the economic carnage from the region's devastating currency devaluations:
* Indonesian stocks tumbled 20% in native currency terms--and 56% in dollars--in the second quarter, through Monday. Year-to-date decline in dollars: 62%.
* In South Korea, the second-quarter loss in dollar terms amounted to 41%, wiping out the first-quarter rebound and leaving the market off 8% year-to-date through Monday, in dollars.
* In Thailand--where the crisis began one year ago this week, after the country devalued its currency--stocks sank 48% in dollar terms in the second quarter and are down 19% year-to-date.
Where is the bottom in Asia?
A Merrill Lynch Gallup survey of global portfolio managers this month showed that Asian managers "have turned sellers on almost all of the markets of Asia."
"The average Asia fund now holds 17% of its assets in cash."
Many analysts now say Asia is in for at least another year of suffering. And the region can't turn around until tottering Japan--where stocks fell 7% in dollar terms in the first half--takes decisive action to clean up its banking system and revive its economy. Until Asia stabilizes, analysts say, other emerging markets are likely to remain off-limits to many big investors.
Bloomberg News was used in compiling this report.