Green equities in emerging markets outperformed those in developed markets in 2010, with Brazil, South Africa and South Korea showing the strongest performance, HSBC said in a report on Wednesday.
Emerging markets’ climate-related equities delivered returns of 2.5 percent in 2010 compared with a 1.2 percent decline in developed markets, the bank said.
Brazil’s market showed 18 percent growth, South Africa added 11.9 percent and South Korea gained 6.8 percent. These regions performed well due to their national climate policies and technological innovations, the report said.
“We expect these markets to continue to perform well in 2011. Given rapidly growing demand for energy and good natural resources, we highlight opportunities in South East Asia and LatAm,” it added.
However, world climate-related equities have lagged behind global equities and are 0.7 percent down over 2010 on the MSCI World Index.
Europe was the worst-performing region in 2010 and fell 8.2 percent due to regulatory uncertainty about emissions reductions, the reduction of wind and solar feed-in tariffs and uncertainty about other financial incentives, HSBC said.
Emerging markets led the way on distributing stimulus money to climate investments in 2010. They gave out $77 billion compared with the $68 billion dispersed by developed markets.
China and South Korea accounted for the majority of emerging markets’ spending with $73 billion. China allocated 1.5 times more money to climate investments than the United States, the second highest spender.
HSBC forecasts global stimulus spending on climate change investments to be 33 percent lower in 2011 than this year at $115 billion. It expects developed markets to overtake emerging markets in terms of climate stimulus spending with $72 billion compared with $43 billion in emerging markets.
“We forecast the U.S. will witness the largest climate stimulus disbursement, followed by South Korea and then China,” the report said.
