Emerging stock markets to avoid

by | Mar 17, 2004 | Archives

Here is valuable data about emerging stock markets from Morgan Stanley, the MCSI Capital Index and Michael Keppler about the emerging stock markets to now avoid including the Egyptian, Indian, Israel, Pakistan, Peru and Thai stock markets.

eClub expert Michael Keppler looks at all foreign stock markets and compares every major market monthly looking at the current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return on equity compared to their average and relative vales and compares them to all other markets. Based on this research he determines which markets offer top value (buy candidates), low value (sell candidates) and which are neutral.

Emerging markets traditionally perform better than major markets but are also more volatile so be more careful with emerging market investments especially the low value markets.

Based on Kepplers evaluation here are the markets he feels are low value now. He views the Egyptian, Indian, Israel, Pakistan, Peruvian and Thai stock markets as low value markets now.

These stock markets could be particularly dangerous at this time.

You can see some examples of why Keppler views these as the low value emerging markets by comparing their price to book value and price to cash flow valuations with the emerging market averages.

The average price to book value for the seven top value emerging markets is 1.46 and price to cash flow 7.7.

See the low value market comparisons below.

Country       Price/Book      Price/Cash Flow
Egypt 2.59 8.3
India 3.67 13.9
Israel 2.87 19.9
Pakistan 2.37 6.7
Peru 2.46 18.8
Thailand 2.66 9.1

Keppler rates Argentina, China, Hungary, Indonesia, Jordan, Malaysia, Mexico, Poland, South Africa, Taiwan, Turkey and Venezuela as neutral, so consider these for a holding pattern now.

Michael Keppler is an eClub advisor and you can learn more about him at https://www.garyascott.com/advisors/144/ and his value selection system at https://www.garyascott.com/investing/346/

Until next message which looks at changes I am making in my portfolio, good investing.