by | Feb 20, 2009 | Multi Currency Investing

Here is Michael Keppler’s February 2009 update on emerging market value.

His comments are:

Emerging Markets equities had a weak start in January: The Morgan Stanley Capital International (MSCI) Emerging Markets Index (December 1988=100) declined 6.5 % in US dollars. Due to a very weak European currency,
however, the Emerging Markets global equity benchmark index gained 1.5 % if measured in euros.

The euro declined 7.8 % to 1.28 (USD/EUR) in January compared to its 2008 year-end level of 1.39 (USD/EUR).

Among the regional indices, Latin America performed best in January (-0.2 %), while Asia declined 6.4 % and Europe, Middle East and Africa (EMEA) lost 12.2 %.

Performance numbers are in US dollars if not mentioned

Two markets closed higher in January and twenty-one markets declined.

The two advancing markets were Chile (+10.8 %) and Brazil (+4.6 %).

India, the third best performing market declined 2 %. Hungary (-25.5 %), Poland
(-24.9 %) and the Czech Republic (-18 %) performed worst last month.

There is one change in our performance ratings this month: Korea is downgraded to “Neutral” from “Buy”. The  Top Value Model Portfolio holds the six “Buy”-rated markets Hungary, Poland, Russia, Taiwan, Thailand and Turkey at equal weights. According to our performance ratings, these markets offer the highest expectation of long-term risk-adjusted returns.

According to our performance ratings, these markets offer the highest expectation of risk-adjusted returns for long-term investors

SELL CANDIDATES (Low Value) Chile,  Colombia, Egypt , India , Mexico, Morocco.

NEUTRALLY RATED MARKETS Argentina, Brazil, China Czech Republic, Indonesia, Israel, Jordan, Korea, Malaysia, Philippines, Pakistan, Peru, Russia, South Africa, Sri Lanka, Venezuela,

Remember that the overall market value is just one of many filters we should use when we review value. The seven steps we use in our reviews include

#1: Are the shares traded in a good value market?
#2: Does the share trade at fair Price to Earnings and Price to Cash Flow ratios?
#3: Does the share pay a good value dividend?
#4: Do the share have a good value relative to their previous price?
#5: Does the company have rising earnings?
#6: Has the share price been rising?
#7: Is the company’s management good and is their product or service line in a wave of the future

Michael Keppler also reminds investors not to misinterperate the investment analysis implicit in the Country Selection Strategy. A country is BUY-rated based on the valuation levels reflected in the MSCI benchmark index of country. A BUY rating therefore does NOT imply that any stock in that country would be considered an attractive investment.

To invest according to the Country Selection Strategy it is necessary to
construct diversified, risk-controlled, representative country portfolios in
every BUY rated country, weighting each country approximately equally in the
overall portfolio. It is not appropriate to instruct a stockbroker to simply to select stocks in the BUY rated countries.

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

Here is the point about emerging markets.

Emerging Markets Index  dropped 53.3 % in US dollars and 50.9 % in euros in 2008 versus  40.7 % in US dollars and 37.6 % in euros for developed markets.

Emerging markets outperformed the developed markets for seven years in a row but in 2008  underperformed the Major Markets by 12.6 and 13.3 percentage points in US dollars and in euros.

Emerging markets are badly needed to produce low cost goods. Globalization is the moving force of the world’s economy. Emerging markets are not lumbered by the huge social costs of developed markets and they fell further than major markets in 2008 not due to fundamentals…but fear.    These are thinly traded markets likely to quickly rise faster than major markets. Investors will figure this out and invest back in. They already may have as December 2008 was good month for emerging markets.

Emerging markets  may be one of the fastest recovering  growing investments for those who are not too risk averse, but not soon so never speculate  more than you can afford to lose.



Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Here are delegates enjoying a coffee break.


Served by our caring staff.


March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

Plus  beause of the unusal opportunity that is unfolding, we have agreed to replace our May Spanish course with a Global Asset Value to join up with JGAM and speak at their JGAM Global Asset Value Strategy Seminar  in Naples Florida, May 29 to 31.