Emerging Markets 01 (May 08 - Dec 11)

[peter]

Emerging market Vietnam was very hot in 2007, many investors opened factories, businesses in Vietnam as the costs were lower than China. Then it got hit very badly from the recession and market crashed. I no longer see much of Vietnam covered under emerging market nowadays.

Anyone following Vietnam? Many Asian markets have recovered strongly, maybe worth to look at laggards like Vietnam.

[kennynah]

better to look to kampuchea

[winston]

MSCI Emerging-Markets Index May Rise 28%, Garner Says (Update2)
By Shiyin Chen and Allen Wan

Nov. 10 (Bloomberg) -- Emerging-market stocks may rise 28 percent by the end of 2010, with gains slowing from this year’s pace amid concern interest rates and oil prices will increase, according to Morgan Stanley.

“Economies and earnings are recovering and it is likely too soon in the cycle for a major peak in emerging-market equities,” Garner, Morgan Stanley’s chief Asian and emerging- market strategist, wrote in the report dated yesterday. “However, we do face the headwinds of monetary policy tightening and a higher oil price.”

The MSCI Emerging Markets Index rose 0.4 percent to 963.06 as of 1:31 p.m. in Singapore, poised for its fifth day of gains. Garner, who predicted in June that the measure will rise to 985 over a 12-month period, said shares in developing nations tend to reach a “local peak in performance” before the Federal Reserve’s first rate increase. Morgan Stanley expects the Fed to start boosting borrowing costs in the third quarter next year.

Barclays Wealth is also turning more cautious on Asia, saying that it has reduced its recommendation on the region to “neutral” from “overweight.”

“We’ve had a strong bounce,” said Manpreet Gill, Singapore-based strategist for Asia at Barclays Wealth, which has $223 billion in assets. “We expect the focus to shift.”

“Micro” themes will dominate emerging markets next year, and investors should favor energy, financial and so-called consumer discretionary stocks, the brokerage said. They also cut technology stocks to “equal-weight” because of valuations and “historical sensitivity to a global rate hike cycle,” according to the note sent to clients.

Investors should buy shares in its so-called Best Business Models list, including Reliance Industries Ltd., India’s biggest refiner, and Ctrip.com International Ltd., China’s largest online-ticketing agent, the strategist also said.

http://www.bloomberg.com/apps/news?pid= ... wZXsdJzgGg

[winston]

Only US$57b flowed into Emerging Markets ? US$5.5t was moved out of Cash ! So where did the money go ??

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Emerging, Commodity Fund Inflows Spurred by Dollar (Update1)
By Ian C. Sayson and Chan Tien Hin

Nov. 20 (Bloomberg) -- Emerging-market equity funds attracted inflows last week, set for a record this year, as investors sought protection from a weaker dollar, EPFR Global said. Commodity sector funds had the best week in 3 1/2 years.

The funds have attracted $56.8 billion in 2009, set to exceed the previous high of $50 billion in 2007, said EPFR, which tracks funds holding $10 trillion worldwide.

Emerging-market bond funds had their second-highest weekly inflows in the period ended Nov. 18 since EPFR started tracking them.

The MSCI Emerging Markets Index, on course for a third weekly gain, has risen 71 percent this year, almost triple the 25 percent gain for the MSCI World Index. Fund flows to developing nations have accelerated on speculation they will benefit most as exports of raw materials and manufactured goods rebound amid the global economy recovery.

“Some underweight funds are trying to play catch-up, while those that have done well will be locking in the gains,” said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur. “Equity markets may vacillate with an upside bias until the end of the year.”

Source: Bloomberg

[kennynah]

Only US$57b flowed into Emerging Markets ? US$5.5t was moved out of Cash ! So where did the money go ??...

maybe wrapped around some tobacco leaves??

[winston]

PE of 20 is normal ? Where's the EPS growth gonna come from ?

DJ MARKET TALK:Little Evidence EM Stock Bubbles-Capital Economics

1200 [Dow Jones] Capital Economics say little evidence of bubbles in EM stocks, though does not rule out possibility of them forming over next few quarters. Notes, interest rates in developed world set to remain low with sluggish growth, so "search for higher returns abroad is likely to continue."

Says Asia exposed given robust economic outlook, prospect of high capital inflows, bubbles could also emerge in Latin America, Emerging Europe. House calculates fair value P/E for Emerging Asia around 20X, Emerging Europe, Latin America around 10X, 15X, respectively. Says these ratios broadly in line with current values.

Adds, "not clear" that emerging equities overvalued vs developed world on simple P/E basis; EM stocks now at discount. However, "none of this means that bubbles won't form further down the road if capital flows into emerging markets continue to grow."

Notes, some policies in place to offset impact of excess capital flows, but doubts governments will risk adopting "draconian controls" which could jeopardize investor confidence; rather, governments will adopt piecemeal restrictions. Concludes, "for now at least, the task at hand is preventing bubbles, not pricking them."

Source: Dow Jones Newswire

[winston]

Emerging-Market Stock, Bond Inflows Rebound After Dubai Selloff
By David Yong and Shiyin Chen

Dec. 11 (Bloomberg) -- Emerging-market funds bounced back from the selloff sparked by Dubai, heading for record annual inflows as investors took money out of U.S. equities and money markets. Developing nation stocks and bonds climbed.

Equity funds focused on developing nations received $2.3 billion more than was withdrawn in the week to Dec. 9, bringing 2009 inflows to $75.4 billion, Cambridge, Massachusetts-based research firm EPFR Global said in a statement.

The previous record was $54 billion in 2007. Emerging-market bond funds took in $317 million in the week, even amid concern that Dubai government-owned companies will delay debt payments.

http://www.bloomberg.com/apps/news?pid= ... ByAdlk.Rcw

[winston]

Emerging-Market Bears Say Options Trades Signal End of Rally By Jeff Kearns

Dec. 14 (Bloomberg) -- Trading of bearish emerging-market options rose to a 10-week high as investors increased wagers that a U.S. exchange-traded fund tracking stocks in developing nations will retreat after doubling since March.

More than 718,000 puts giving the right to sell the iShares MSCI Emerging Markets Index changed hands last week, or 54 percent higher than the average this year. The ETF, which tracks shares in 22 countries, lost 1.2 percent to $41.35 last week as the Dollar Index rose a second week, oil posted the longest losing streak in six years and investors speculated that the heightened risk of default in Spain, Greece and Dubai may signal that credit losses will spread throughout the global economy.

“What’s notable is the size and consistency of the trading over the past week,” said Mike Thurow, a senior options strategist at Susquehanna Financial Group LLP in Bala Cynwyd, Pennsylvania. “It’s been a steady stream of put buying and call selling, which means investors are betting on a decline over the next few weeks, as they’ve been primarily focused on January options.”

Investors are boosting wagers that the EEM will retreat 5.7 percent from last week’s close before next month’s options expire Jan. 15. The number of existing January $39 puts almost tripled last week to 80,461 contracts for the biggest increase in open interest among all options on the ETF, according to data compiled by Trade Alert LLC, a New York-based provider of options market analytics.

‘Has Me Nervous’

“If there’s one thing that has me nervous about being in emerging markets now, it’s a sharp appreciation in the dollar,” said Greg Lesko, the head of emerging-market equity at Deltec Asset Management in New York, which oversees $750 million. “Commodities priced in dollars will generally go down and there’s a significant amount of the emerging world that’s sensitive to commodities, like Brazil and Russia.”

Dubai’s debt woes may worsen to become a “major sovereign default” that roils developing nations and cuts off capital flows to emerging markets, Bank of America Corp. said Nov. 27. The Dubai Financial Market General Index has fallen 23 percent since Nov. 11.

“Investors are anticipating that the bull market has plateaued,” said Matthew Kolbe, an ETF options trader at Group One Trading LP in Chicago. “They’re waiting to see if growing sovereign debt concerns will spark a sell-off in emerging markets.”

http://www.bloomberg.com/apps/news?pid= ... sSluOpWeYk

[winston]

Stratfor’s George Friedman: Long Turkey, Short China Written by Matt Hougan

Smart investors are expanding the types of sources they consult in their research. Many are turning to Stratfor, a global intelligence company sometimes referred to as the “Shadow CIA.”

Founded by George Friedman, Stratfor has more than 500 employees scattered around the globe, who aim to provide political, economic and military intelligence long before you read about it in the Wall Street Journal. For risk-savvy global investors, Stratfor’s Web site and reports are a key part of its due diligence.

http://www.indexuniverse.com/sections/f ... l?Itemid=5

[winston]

Fund Flows Set for ‘Testing Year’ as Stimulus Wanes (Update3)
By Shiyin Chen and Garfield Reynolds

Dec. 18 (Bloomberg) -- Emerging-market equity fund inflows slowed in the week to Dec. 16, with 2010 poised to be a more “testing year” amid waning stimulus measures worldwide, according to EPFR Global.

Net inflows of $571.4 million added to more than $75 billion in developing-nation equity funds this year, set for a record, EPFR said in an e-mailed statement. Funds investing in global emerging markets, Asia excluding Japan, Latin American and commodity stocks as well as U.S., global and high-yield bonds may all set new highs in 2009, according to the statement.

The MSCI Emerging Markets Index slipped for a fourth day, falling 0.2 percent to 953.05 at 10 a.m. in London. The gauge has rallied 68 percent this year, rebounding from last year’s record 54 percent slump. Developing nations made up 10 of the best-performing stock indexes as stimulus measures from China to Brazil helped bolster a recovery in economic growth.

“Looking at the emerging markets, there is really pretty good growth there,” Jim McCaughan, chief executive officer of Principal Financial Investors, said in a Bloomberg Television interview from Hong Kong. “There are maybe two things that I would point to that are sources of instability in the next 12 months. The U.S. is no longer as big an importer as it was, so East Asia has to reorient its economies more into their domestic economies away from purely export-led growth, and secondly, commodities.”

Asia excluding Japan equity funds attracted $301 million in the week and GEM funds received $404 million while net redemptions from Emerging Europe, Middle East and Africa reached a six-week high, EPFR said. Latin America stock funds also posted outflows for the second time in three months after Standard & Poor’s cut Mexico’s credit ratings on Dec. 14.

Bond Inflows

Emerging-market bond fund inflows in the week to Dec. 16 totaled $522 million, on course for its second-best year after 2005, the Cambridge, Massachusetts-based research firm that tracks funds with $12 trillion in assets said.

Within developed markets, U.S. equity funds absorbed $1.69 billion, snapping a three-week losing streak, EPFR said. The group is still poised to lose $84.7 billion this year, compared with net redemptions of $74 billion last year.

Japanese equity funds are also set to post net outflows of $7.5 billion this year, even after drawing $248 million during the week, while European stock funds are poised for net gains of $2 billion this year, following seven straight years of redemptions, according to the statement.

http://www.bloomberg.com/apps/news?pid= ... 2UXXFziTx4