International Investment Emerging Market Value Analysis – May to June


International investments in emerging markets generally fall fastest in times of turmoil.

This is why it’s vital to select markets and shares that offer good value when investing in emerging markets.

One way we keep track of value is to follow the analysis of our friend, Michael Keppler. Michael continually researches international emerging stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return. He compares each emerging stock market’s history. From this he develops his Good Value Emerging Stock Market Strategy. His analysis is rational, mathematical and does not worry about short ups and downs.

He is in my opinion one of the best market statisticians in the world and numerous very large fund mangers use his analysis to manage funds. In January, his company, Keppler Asset Management, was, for the third consecutive year, named Best Fund Company in the Fund Specialists’ category by Capital, a leading German business magazine. Keppler’s firm was one of only six out of 100 companies tested that received the highest five-star rating based on an independent evaluation of fund quality, management, and customer service by Feri Rating & Research and Steria Mummert Consulting.

Once a month we share Michael’s emerging market analysis with you.

Here is a summary of Keppler’s current comments on recent developments & outlook in international emerging equity markets.

Recent Developments & Outlook

What a different May this was. Last year, Emerging Markets equities suffered their worst monthly setback since September 2002, when they dropped 10.8%. Now, in May 2007, the MSCI Emerging Markets Total Return Index gained 5% in US dollars and 6.4% in euros.

Since the beginning of the year, the MSCI Emerging Markets Index is up 12.3% and 10% in euros.

Of the three regional indices, Latin America stands out with a 10.6% monthly gain, followed by Asia , which was up 6.5%. Europe, Middle East and Africa (EMEA), however, was the only declining region with a monthly loss of 2%.

Year to date, all regions are recording positive returns: Latin America leads big time with a 23.6% gain, Asia is up 11.8% and EMEA stands 5.3 % higher compared with its end-of-December 2006 level. All performance numbers are in US dollars unless mentioned otherwise.

Twenty-one markets advanced and six markets declined last month. The best three performers were Mexico (+11.8%), Brazil (+11.7%) and the Philippines (+10.8%).

Venezuela ’s reported 60.2% total return in US dollars cannot be taken seriously, since, according to my knowledge, there is no honest living creature on this earth who could have benefited from the change of how the bolívar venezolano is calculated.

Sri Lanka fared worst among the decliners, losing 5.9%. Russia was not much better with a 5.8% loss, while Jordan came in with a 3.9% decline.

Compared with their levels at the beginning of the year, twenty five markets were higher and two markets were lower. The biggest winners this year have been Peru (+53.9%), Pakistan (+33%) and Morocco (+30.9%).

Russia (-11.1%), Sri Lanka (-10.4%) and Taiwan (+0.4%) performed worst so far this year.

There are no changes in our performance ratings this month. The Top Value Model Portfolio contains the seven national MSCI markets of Brazil , Korea , Malaysia , Poland , Taiwan , Thailand and Turkey at equal weights. According to our performance ratings, these markets offer the highest expectation of risk-adjusted returns.

SELL CANDIDATES (Low Value) Argentina , Egypt , India , Indonesia , Mexico , Morocco , Pakistan , Peru , South Africa .

NEUTRALLY RATED MARKETS Chile , China , Colombia , Czech Republic , Hungary , Israel , Jordan Philippines , Russia , Sri Lanka , Venezuela .

For more details on Keppler’s analysis, contact Roderick Cameron at 1-212-245-4304 or email roderick.cameron@kamny.com

You can get ideas on shares in these top value emerging stock markets from Thomas Fischer at Jyske Bank at Fischer@jbpb.dk

Jyske Bank is the second largest Danish bank with 450,000 domestic clients, 35,000 international clients, USD 23 Billion in total assets, and a Moody’s rating of AA1. Jyske has over 35 years’ specialization in private banking and Denmark is ranked by Moody’s as the safest country in the world to have a bank account in.

Jyske Bank uses a good value system as well and their affiliated fund management company has been rated #1 by Morningstar. They use this value system to help us select shares for Multi-Currency Portfolio Educational Tracking Service. This has worked pretty well. In 2006 the mainly equity portfolios we tracked rose 42.93% (Emerging Market) and 114.16% ( Asia Emerging Market) in a year. This year the five portfolios we track are up in the past seven months:

 

Portfolios Dec 29 Jan 30 Feb 26 Mar 27 Apr 30 May 11 June 8
Swiss Samba 8.10% 10.18% 20.49% 16.15% 26.60% 32.86% 40.40%
Emerg Mkt 15.11% 14.83% 19.69% 12.81% 32.46% 31.13% 39.94%
$ Short 12.91% 9.71% 18.17% 20.12% 30.79% 30.44% 32.12%
$ Neutral 7.94% 12.63% 20.28% 16.58% 25.58% 28.54% 32.92%
Green 34.77% 50.08% 86.22% 86.86% 135.11% 142.42% 163.69%

 

You can learn why this performance has taken place in a sixteen page email report about how 13 economic forces now clash to shape investments markets ahead that show the rewards and the risks. The report also outlines the five new Multi-Currency Portfolios we are tracking in our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service. Details are at http://www.garyascott.com/catalog/bldh

At our upcoming IBEZ in N.C., we will update our latest multi currency portfolios and much more. Join us September 14 – 16, 2007 in North Carolina , http://www.garyascott.com/nccourse

Or come to Ecuador November 9-11. See http://www.garyascott.com/catalog/IBEZec/

Until next message, may all you global investments be good.

Gary


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