Emerging Market Value Analysis – August – September 2007

by | Sep 17, 2007 | Archives

Emerging markets generally fall fastest in times of turmoil.  Yet they are (and have been for the past decade) the fastest growing equity investment sector.  You can see how fast they can dip from the sudden drop in August.

From August 10 to 17, both the Swiss Samba (invested in Latin bonds and equities) and the Emerging market portfolios we track for educational purposes (invested in China , India , Eastern Europe, Asia and Turkey equities) dropped nearly 50% in one week!

Yet, can we afford not to hold such growth potential. From August 10 to September 9, both portfolios recovered.  The Emerging Market Portfolio more than doubled  its value in less than a month!

Can we not take advantage of such upwards potential?  30.86 and 67.95% growth in ten months and nne days is phenomenal.

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 Multi-Currency Portfolios we are tracking in our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service. Details are at https://garyascott.com/catalog/bldh

Because of this performance one of the largest financial publishers will shortly begin a cooperative plan to offer our Multi Currency Educational Service.  “ Gary , I have sent your promo out to a designer this week…we’re eager to market ASAP.  I’m waiting to hear back from our ops crew about how best to get you the orders.”

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The main reason these portfolios have performed is that we look first and foremost for value in our selection process. 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

After five consecutive new monthly all-time highs, Emerging Markets equities declined in August for the first time since February. In August, the Morgan Stanley Capital International (MSCI) Emerging Markets Total Return Index (with net dividends reinvested) lost 2.1 % in US dollars and 1.7 % in euros.

Year-to-date, the MSCI Emerging Markets Benchmark Index is up 21.1 % in US dollars and 17.2 % in euros.

Of the three regional indices, Asia declined least last month with a loss of 1.4 %, followed by Latin America with a 2.9 % decline and Europe, Middle East and Africa (EMEA), which was down 3 %.

Year-to-date, Asia is leading with a total return of 26 %, followed by Latin America, which is up 25 %, while EMEA is up 8.9 %. Performance numbers are in US dollars if not mentioned otherwise.

Four markets rose and twenty-three markets declined in August.

The best performing emerging market last month was China , which gained 7.2 %. Morocco and Sri Lanka shared second and third place with a 4.7 % monthly gain.

The biggest losers in August were Pakistan (-11.7 %), Colombia (-11.1 %), and Hungary (-9.2 %). Year-to-date, twenty-four markets are up and three markets are down.

Peru is leading with a whopping 75.5 % gain, followed by China (+43.8 %) and Turkey (+41.2 %).

The worst performers this year have been Sri Lanka (-13.1 %), Jordan (-2.6 %) and Russia (-2 %). Incidentally these were also the only losing markets year to date.

There are no changes in our performance ratings this month. The Top Value Model Portfolio contains seven markets  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 (see two fo them above have performed even more).

We will introduce our new 2008 multi currency portfolios and much more at International Investing and Business Made EZ course in Ecuador .  Join us November 9-11. See https://garyascott.com/catalog/IBEZec/

Stay on for our Ecuador real estate tour and shamanic Mingo and save $398. See https://garyascott.com/catalog/ecuador-tours-november-2007

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