LONDON, Sept 30 (Reuters) - Another hot run for Brazil and Latin America kept emerging market assets soaring in the third quarter and on course for what could be their best year since 2009.
The prospect of central banks around the world keeping the stimulus taps open following Britain's June 23 vote to leave the European Union increased investors' appetite for higher-risk higher-reward assets that only EM economies offer.
"During the summer it was a global rally with no discrimination," Crédit Agricole senior emerging market strategist Guillaume Tresca said. "Volatility was really low so that encouraged carry trades. Also, there have been no big surprises in China and no big surprises in commodities."
Brazil tops the equity returns table with a third quarter 13 percent rise, taking year-to-date gains to 62 percent in dollar terms, these charts show:
The surge - spurred by the ousting of left-wing leader Dilma Rousseff, falling inflation and the prospect of economic reform - helped Brazil leapfrog nearby Peru where stocks have risen above the 50 percent mark.
And another solid quarter in Colombia has put it in the South American top three for worldwide equity performance.
Overall, MSCI's closely-followed 23-country emerging market index has risen 8 percent for the quarter, its best performance since early 2012.
Russian shares have extended their strong run with another 5.7 percent quarterly gain, bringing annual returns to 28 percent. This rise could be extended in the last quarter should oil prices build on recent gains and the central bank cuts interest rates further.
Asian outperformers were Indonesia and Thailand with gains of 27 percent and 25 percent respectively, while Chinese A-shares are now up 7.9 percent for the year after suffering in the April-June period when the yuan suffered its biggest quarterly fall on record.
Index losers included Poland, which suffered the fifth quarterly fall in the last six, while Philippines fell on concerns over President Rodrigo Duterte's controversial policies.
Emerging bonds too have posted world-beating returns.
Debt denominated in emerging currencies have returned 17 percent in dollar terms while sovereign dollar bonds have provided 15 percent - at least double U.S. Treasury gains of 7.5 percent:
Top performing sovereigns were crisis-hit Venezuela with a 50 percent gains and Brazil where third quarter returns of 4 percent brought 2016 gains to 26 percent.
Emerging companies' dollar bonds have returned 14.2 percent.
Jorge Marisal, cio for emerging markets at UBS Wealth Management, expects the sector to continue its outperformance, especially on local markets where he predicts interest rate cuts in Brazil, Russia, India and Indonesia.
"(Developed central banks) basically told emerging markets they have the ATMs open for longer, which is good for local bonds as it will allow more countries to ease policy."
The biggest exception to the emerging market rally is Mexico where the peso has been battered by the prospect of a U.S. election victory for Republican Donald Trump.
Trump has threatened to slap tariffs on Mexican imports, slash immigration and curb remittances.
The peso fell 5.5 percent in the third quarter as the election tempo picked up, despite interest rate rises. Year-to-date it has fallen around 11 percent against the dollar:
"The U.S. election is one risk but there are other drivers behind the peso's negative momentum," Mariscal said, naming oil prices, a budget deficit and reform setbacks.
Even if Trump lost the election, he said the peso would "recover temporarily then slide again".
Another currency loser has been Nigeria's naira which, freed of its dollar peg, has slumped another 10 percent to leave it down 37 percent since the start of 2016.
The best currency performer again is Brazil's real, which is up more than 20 percent for the year.
Reporting by Marc Jones; editing by Mark Heinrich