South Korea was the star performer with a return of over 50 per cent, followed by Thailand at 20 per cent and China at 5 per cent. The laggards included Latin American countries like Brazil and Venezuela as well as Russia. In fact, Russia was the worst performer with a negative return of around 90-95 per cent.

According to the study, markets in countries which are generating a current account surplus have outperformed, while capital importing countries like India have under performed. The strong performers in 1998 (South Korea and Thailand) are countries which had been hit hard by the south-east Asian crisis and managed to progress on structuralreforms aided by bail-out packages from multilateral financial institutions like the IMF and World Bank. However, their outperformance is on a low base. According to the study, although the Indian markets were depressed for most part of 1998, the depression is line with the other markets and is not any cause for concern. On India, the study says, in the absence of any direction to the economy, the markets have been moving in a narrow band and has not trended up for the last three years. ``Although a 7 per cent plus growth has been achieved in the past, the growth has not been profitable,'' it adds.

The study further notes that markets in the developed world have climbed to record levels after falling on worries over Russia and Japan. The Dow crossed the 9000-mark for the first time after successive rate cuts by the Federal Reserve. ``After the rate cuts, more money became available for investment and since prices in the US were off peak levels and emerging markets were experiencing difficulties, investorstended to invest in the US. But as the developed markets reach peak valuations and the emerging world stabilises, money should again flow towards emerging markets,'' the study adds.

On that hopeful note, the study also says when funds start flowing into the emerging markets, India should be able to attract a large percentage of funds. This is because the Indian markets rank amongst the top five in Asia on market capitalisation.