It wasn’t supposed to happen this way. The biggest surprise for equity investors in 2011 was not the weakness of the crisis-ravaged European markets but the carnage in the stock markets of the emerging economies.

Brazil, Russia, India and China did worse than Portugal, Italy, Ireland, Greece and Spain. As a group, they were down 26 per cent in US dollar terms versus a decline of 23 per cent for the bad boys of the eurozone.

While the developed economies have been struggling to generate growth momentum, the emerging economies have had the opposite problem. Super-easy monetary and fiscal policy has led to real estate bubbles, capacity constraints and labour shortages. In 2011, governments moved to quell the inflationary pressures even at the cost of stock market sell-offs and weaker growth.