One way to protect against a dollar dive is to invest in
equities. Emerging equities especially make sense now. They
have outperformed major markets for the past five years in
a row.
However, they are further away so it can be harder to make
good decisions. One way to protect against equity errors
is to look for good value.
Our friend and statistical expert, Michael Keppler, continually
researches all 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 markets
history and from this develops his good value emerging stock
markets strategy.
Yesterday, we reviewed Michael’s Major Equity Markets.
Here is Michael’s May 2006 review of Emerging Equity
Markets:
Recent Developments & Outlook
Emerging Market equities continued their strong recent uptrend.
In April, the Morgan Stanley Capital International (MSCI)
Emerging Markets Total Return Index gained 7.1 in US dollars
and 2.9 % in euros. Major markets gained only 3% in US dollars
and due to consistent dollar weakness lost 1% in euros last
month.
The emerging markets benchmark finished at new all-time-highs.
Since the beginning of the year, the MSCI Emerging Markets
Total Return Index gained 20 % in US dollars and 12.4 % in
euros. During the same time, the US dollar declined 6.8 %
versus the euro.
All three regional indices were higher last
month. Latin America gained 8 %, Asia 7 % and Europe, Middle
East and Africa (EMEA) was up 6.7 % (performance numbers
are in US dollars, unless mentioned otherwise). Year to date,
Latin America advanced 24.8 %, followed by EMEA, which gained
22.1 %. Asia came in last with a gain of 17.2 %.
Last month twenty-three markets included in the MSCI Emerging
Markets Index were up and four markets declined. Argentina
turned out to be the biggest winner (+19.8 %), followed by
Peru (+17 %) and Poland (+15.8 %). Sri Lanka and Pakistan
(both down 3.4 %) and Colombia (-2.3 %) performed worst.
Year to date, twenty-six markets advanced
and one market declined. Compared to the end of last year,
Morocco gained 58.3 %, Venezuela was up 55.2 % and Argentina
rose 52.9 %. Jordan (-11.9 %) was the only declining market
year-to-date. Other relatively poor performers compared with
the end of last year were Israel (+0.6 %), Egypt (+6.6 %)
and Chile (+9.4 %).
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
6.9 % in US dollars and 2.7 % in euros last month.
Year to date, the Emerging Markets Top Value Model Portfolio
is up 20.4 % in US dollars and 12.7 % in euros.
There are two changes in our performance
ratings this month: Argentina and Morocco are downgraded
to "Sell" from "Neutral".
The Top Value Model Portfolio, which only
holds "Buy"-rated
markets, now contains the nine emerging markets of Brazil,
China, Korea, Malaysia, the Philippines, Russia, Taiwan,
Thailand and Turkey at equal weights. According to our performance
ratings, these markets offer the highest expectation of risk-adjusted
returns.
You can get ideas on shares in these top value emerging
stock markets from Thomas Fischer at Fischer@jyskebank.dk
For more details on Keppler's analysis, contact Roderick
Cameron at 1-212-245-4304 or at roderick.cameron@kamny.com
Double your profit potential with the MultiCurrency
Sandwich. Leverage investments in top value markets. DETAILS
P.S. Learn about top value emerging market
shares. Join Merri, and me at our September 15-16-17 International
Business and Investing Made EZ course in North Carolina.
Review where to invest and do business now and learn which
markets and currencies may be strong in the year ahead. DETAILS
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