International Investments – December 2006 Emerging Market Value Analysis

by | Jan 22, 2007 | Archives

International investments in emerging markets do best when the investments are in good value markets. Our friend, Michael Keppler, continually researches international investments in 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 international investments emerging stock market’s history and from this develops his Good Value Emerging Stock Market Strategy. His analysis for international investments is rational, mathematical and does not worry about short ups and downs.

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

International investments in emerging markets equities finished another strong year with an equally impressive monthly gain. In December 2006, the Morgan Stanley Capital International (MSCI) Emerging Markets Index gained 4.5% in US dollars and 5.0% in euros.

2006 was the sixth consecutive calendar year in which international investments in emerging markets have outperformed the developed markets. In 2006 the Emerging Markets benchmark gained 32.2% in US dollars and 18.2% in euros. This compares to a total annual return of 20.1% in US dollars and 7.4% in euros for the MSCI World Index of the developed markets in 2006.

Over the last six years ending in December 2006, the Emerging Markets index delivered a total return of 217% in US dollars and 125% in euros, while the Major Markets Index gained 33.8% in US dollars, but, due to the weakness of the US currency versus the euro, lost 4.8% in euros.

Among the regional indices, Latin America was the best performing region in December (+7%), as well as in the last three(+22%) and twelve (+43.2%) months. Latin America was also the best performing region the year before (+50%). Asia came in second for the year (+32.7%) but ranked third in December (+3.7%) and in the last three months (+15.2%). Europe, Middle East and Africa (EMEA) finished the year in third place among the regions with a total return of 24%. It gained 4.3% in December and 19.2% in the last quarter 2006. Performance numbers are in US dollars if not mentioned otherwise.

Twenty-two markets closed higher in December and five markets declined. The three top performers of the month were China (+14.6%), Venezuela (+12.2%) and Hungary (+11%). Thailand (-9.8%), Pakistan (-6.5%) and Jordan (-1.6%) performed worst last month.

As for the calendar year 2006, twenty-four markets included in the MSCI Emerging Markets universe achieved positive returns. There were only three losing markets in 2006. The highest total returns were recorded in China (+82.9 %), Venezuela (+79.5 %) and Morocco (+68 %).

Last year's laggards were Jordan (-30.9%), Turkey (-7.2%) and Israel (-5.3%).

There is no change in our performance ratings this month.

The Top Value Model Portfolio contains the seven national markets of Brazil, Korea, Malaysia, Poland, Taiwan, Thailand and Turkey at equal weights.

SELL CANDIDATES: Argentina, Egypt, India, Indonesia, Jordan, Mexico, Morocco, Pakistan, Peru , South Africa

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

You can get ideas on shares in these top value emerging stock markets from Thomas Fischer at

For more details on Keppler's analysis, contact Roderick Cameron at 1-212-245-4304 or email

Our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service tracks five multi-currency portfolios so we can learn from their rises and falls. The emerging markets portfolio we track is leveraged in Czech koruna. You get a free 16 page report on economic conditions for 2007 when you enroll in our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service. Subscription is $149 for a year. Details are at

You can continue this message with pictures and learn about my recent experience in Ecuador dental savings. Go to

Or until next message I hope you find good value in your international investments.


P.S. Join us in the Ecuador sun this winter. Here is a schedule of the courses Merri and I will conduct.

Feb. 20 – 25, Tues.-Sun. Import-Export Course.

Mar. 9 – 15, Fri.-Thurs. Expanded Super Thinking + Spanish.

Mar. 16 -18, Fri.-Sun. International Business and Investing Made EZ.

Mar. 19 – 21, Mon.-Wed. Andes Extension & Real Estate Tour.