Emerging Markets Value Analysis April to May 2007

by | May 11, 2007 | Archives

Emerging markets continue to do well. Our friend, Michael Keppler, continually researches many 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 major 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.

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

After small declines in January and February, Emerging Markets came back strongly in March and reached new all-time highs by the end of April. The Morgan Stanley Capital International (MSCI) Emerging Markets Total Return Index gained 4.6 % in US dollars and 2.1 % in euros last month.

The MSCI Emerging Markets Total Return Index is up 7 % in US dollars and 3.4 % in euros. During the same time, the US dollar declined 3.4 % versus the euro.

All three regional indices rose last month. Latin America gained 5.4 %, Asia 4.9 % and Europe, Middle East and Africa EMEA) was up 3.6 % (performance numbers are in US dollars, unless mentioned otherwise).

Year to date, Latin America advanced 11.8 %, followed by EMEA, which gained 7.4 %. Asia came in last with a gain of 5 %.

Of the twenty-seven markets contained in the MSCI Emerging Markets universe, twenty-two markets were up and five markets declined.

Peru was the biggest winner (+15.5 %), followed by India (+12 %) and Chile (+11.5 %). Venezuela (-17.5 %), Sri Lanka (-4.1 %) and Russia (-2.7 %) performed worst last month. Year to date, the ratio of winners and losers was the same, with Peru (+ 44.3 %), Morocco (+34 %) and Pakistan (+27.3 %) leading the pack and Venezuela (-26.7 %), Russia (-5.7 %) and Sri Lanka (-4.8 %) performing worst.

The Emerging Markets Top Value Model Portfolio, which invests according to the Top Value Strategy and assumes index returns for each national market included in the strategy, gained 5.3 % in US dollars and 2.7 % in euros in April outperforming the MSCI EM Index by 70 basis points in US dollars and by 60 basis points in euros. Year to date, the Emerging Markets Top Value Model Portfolio is up 13 % in US dollars and 9.2 % in euros, outperforming its benchmark by 6 and 5.8 percentage points, depending on the currency.

There are no changes in our performance ratings this month.

The Top Value Model Portfolio, which only holds “Buy” rated markets, contains the seven emerging markets of Brazil, Korea, Malaysia, Poland, Taiwan, Thailand and Turkey at equal weights.

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 uses a good value system as well and its 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 emerging markets portfolios we are tracking are up in the past six months since we began:

Portfolios 2007 Dec 29 Jan 30 Feb 26 Mar 27 Apr 30
Swiss Samba Latin Emerging Shares & Bonds 8.10% 10.18% 20.49% 16.15% 26.60%
Emerg Asian and Turkey Shares 15.11% 14.83% 19.69% 12.81% 32.46%

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 International Investments Course with Multi Currency Investments and Portfolios

At our upcoming IBEZ in N.C., we will update our latest multi currency portfolios and much more. Join us May 25 – 27, 2007 at the International Business and Investing Course in North Carolina . Thomas Fischer joins me to update global economics there. International Investments and International Business Course, West Jefferson, North Carolina, May 25-26-27, 2007

Learn more about Ecuador ’s emerging market at Ecuador Political Benefit

Until next message good international investing.