Economies and stockmarkets do not always match up well

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Economies and stockmarkets do not always match up well
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With countries, classifying development mostly comes down to income level. But the criteria are different for financial markets

Monty Python’s “cheese shop” sketch—everybody who is over 50 and a comedy nerd, that is. The shopkeeper, played by Michael Palin, asks a customer, played by John Cleese, what cheese he would like. Do you have Red Leicester? Sold out. Caerphilly? On order. Cheddar? Not much call for it. Each increasingly testy request for a different cheese is cheerfully met with a “no”, “sorry” or feeble excuse.

It is light on exposure to the fastest-growing bits of the world economy, notably in Africa. Instead it has a heavy tilt towards economies in the Asian supply chain to rich-world consumers. In short, it looks to some investors like a cheese shop that is so clean because it is uncontaminated by cheese. Yet the trouble lies not with the index compilers, but with the nature of public markets.

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