Emerging Equity Market Value Analysis – November – December 2007

by | Dec 15, 2007 | Archives

Emerging equity market values are the best long term indicator of where to invest in the emerging sector.

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 managers 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

Last month, the Morgan Stanley Capital International (MSCI) Emerging Markets Index declined 7.1 % in US dollars and 8.4 % in euros. This was the worst monthly performance since May 2006, when the MSCI Emerging Markets Index tumbled 10.5 percent.

Year-to date, the MSCI Emerging Markets Index is up 38.9 % in US dollars and 24.8 % in euros.

As for the regional indices, Asia declined 9.4 %, Latin America gave up 5.7 % and Europe, Middle East and Africa (EMEA) was down 2.9 %.

Year to date, Latin America leads with a 48.4 % gain, Asia returned 41.8 %, while EMEA came in with a gain of 26.6 %. Performance is calculated in US dollars, if not mentioned otherwise.

Six markets closed higher in November and twenty-one markets declined.

Egypt (+3 %) turned in the highest monthly return, Jordan (+2.9 %) came in second and Colombia took bronze with a 2.6 % gain.

Peru performed worst in November, losing 13.7 %, followed by China (-13.5 %) and Taiwan (-11.2 %).

Year to date, twenty-six markets covered here achieved positive returns, and one market declined.

The best performers were Peru (+98.4 %), Brazil (+74.5 %), and China (+74 %). Sri Lanka (-15 %), Argentina (+0.9 %) and Venezuela (+4.8 %) performed worst year to date.

There is one change in our performance ratings this month: Argentina is upgraded to “Neutral” from “Sell”.

This does not, however, change the composition of the Top Value Model Portfolio, which currently contains the seven 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) Egypt , India , Indonesia , Mexico , Morocco, Pakistan , Peru , South Africa .

NEUTRALLY RATED MARKETS Argentina, 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.

Here is the final 2007 one year performance of the portfolios we created and tracked with Jyske Bank and excerpts from the 2008 Portfolio Update #2 from our Multi Currency Educational Subscription.

“Portfolios 2007 Oct 31
Swiss Samba 53.32%
Emerging Market122.62%
Dollar Short48.19%
Dollar Neutral38.67%
Green 266.30%

However the 2008 portfolios we are now tracking were not immune from the decline of the last month. Here is how they performed Nov. to Dec. 2007:

Portfolios 2008 Dec. 01
Emerging Market -19.62%
Danish Health -38.06%
$ Short Non-6.24%
Blue Chip-2.00%

You can learn why this performance has taken place and see the new 2008 portfolios in our Multicurrency Portfolio Educational Service. Details are at https://www.garyascott.com/catalog/bldh

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


Join Merri and me in Ecuador this winter.

Enjoy shopping in the area. Our village Cotacachi is a leather village.

Jan. 18 – 23 Ecuador Spanish Course

Jan. 24-25 Imbabura Real Estate Tour

Feb. 18-23 Ecuador Import Export Course

Here is more leather.

Mar. 7-9 Thomas Fischer at Jyske Bank will join us for our International Investing and Business Made EZ Ecuador Course

Mar. 10-11 Imbabura Real Estate tour Otavalo is a textile village. Here are some shots from Otavalo market the largest indigenous textile market in the world.

The village San Antonio de Ibarra is near and specializes in wood carving.

Plus on the coastal tour we’ll see property with views like this.

Mar. 12-14 Coastal Real Estate tour