After Bloody May, easily the second worst
month for emerging markets this decade, I have anxiously
been awaiting Michael Keppler’s monthly assessment.
Michael 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 emerging stock market’s history and from this
develops his Good Value Emerging Stock Market Strategy.
His analysis is rational, mathematical and does not worry
about short ups and downs.
Here are Keppler’s comments on recent
developments & outlook.
“In May Emerging Markets equities
suffered their worst monthly setback since September 2002,
when they dropped 10.8 %.
“Last month, the MSCI Emerging Markets
Total Return Index dropped 10.5 % in US dollars and 12.2
% in euros. For the year the MSCI Emerging Markets Index
is up 7.4 % in US dollars. However, due to an 8.2 % decline
in the value of the US dollar, it is down 1.4 % year to
date, if performance is measured in euros.
“Of the three regional indices,
Asia lost 7.7 %, Europe, Middle East and Africa (EMEA)
declined 13.3 % and Latin America came in last with a monthly
loss of 13.9 %.
“However year to date, all regions
are still recording positive returns: Asia leads with an
8.1 % gain, Latin America is up 7.5 % and EMEA stands 5.9
% higher compared with its end-of-December 2005 level.
All performance numbers are in US dollars unless mentioned
otherwise.
“Twenty-four markets declined and
three markets advanced last month. The worst three performers
were Turkey (-27.9 %), Colombia (-19.3 %) and Argentina
(-18 %).
“An additional twelve markets suffered
double-digit losses.
“The three rising markets, on the
other hand, eked out only tiny gains. Those were Sri Lanka
(+0.6 %), Jordan (+0.4 %) and the Philippines (+0.2 %).
Compared with their levels at the beginning of the year,
twenty-one markets were higher and six markets were lower.
“The biggest winners this year have
been Venezuela (+48 %), Morocco (+41 %) and Russia (+29
%). Turkey (-19 %), Egypt (-11.6 %) and Jordan (-11.2 %)
performed worst so far this year.
“The Top Value Model Portfolio based
on the Top Value Strategy lost 9.4 % in dollars and 11.2
% in euros last month. Since the beginning of the year,
the Top Value Model Portfolio has gained 9 % in US dollars
and 0.1 % in euros, outperforming the benchmark by 1.6
and 1.5 percentage points.
“Despite the drop, there
is no change in performance ratings this month. The Top
Value Model Portfolio contains the nine "Buy"-rated
markets of Brazil, China, Korea, Malaysia, the Philippines,
Russia, Taiwan, Thailand and Turkey at equal weights.
According to his 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
Until next message good natural health,
wealth and international investments!
Gary
