Rant About It

Archive for the ‘Emerging Markets’ Category

Is Emerging Market Craze Over ?

Posted by rantaboutit on February 21, 2007

For years, investors shunned emerging markets stock funds, which have historically been regarded as some of the riskiest investments around. Over the past decade, emerging markets stock funds have attracted just $4 billion a year on average, while domestic stock funds have pulled in more than $108 billion annually

But all that has changed in the past two years. Emerging markets stock funds have posted eye-popping gains of around 32% a year since 2005 and attracted investor interest, drawing in around $14 billion of new money annually. Last year, they took in more new money than domestic stock portfolios did.

Investing Outside the U.S.
Why you should put a portion of your portfolio in international stocks ? View this video…

More on what analyst have to say about Global Emerging Markets

And finally check out the 3 International Stock Picks

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Is South America the Answer ?

Posted by rantaboutit on January 26, 2007

With emerging markets grabbing investor attention, many are turning their focus towards South American markets. Strong exports, high commodity prices and increased investments have been contributing factors to growth within many of the Latin American markets. As a result, many companies are working to capitalize across a variety of sectors such as DVD manufacturer Infosmart Group, Inc. IFSG in the digital media and tech market, ZAP ZAAP and Rotoblock Corporation ROTB taking advantage of the growing demand for alternative and renewable transportation, as well as GoldenPeaks ResourcesLtd. GL and other mining companies pursuing resource plays within Argentina and surrounding areas. Lets take an example of Brazil to understand where does the South American market stand.


Tech & Media Market

Computer sales increased more than 20% in 2006.
This growth can be attributed to a variety of factors such as government incentives, a high level of Internet use and overall economic growth leading to increased consumer purchasing power.

DVD player market is also growing rapidly in Brazil. Brazil is one of the largest markets in the world with the population of over 180 million. Furthermore Brazilian people enjoy music and film, which leads to increasing sale of discs. This could benefit DVDR manufacturers like Infosmart Group, Inc. Somehow the local production has not been able to catchup with the growing demand, which has lead to increased imports especially from U.S. To get a big chunk of the pie Infosmart Group, Inc has decided to establish a production facility in Brazil. According to the company, the sales from their Brazil facility are expected to contribute approximately 40% of the group revenue.

Energy & Transportation Technology
45% of Brazil’s energy production comes from Renewable/alternative energy. This has made Brazil less dependent on foreign oil. Brazil is the world’s largest producer and exporter of sugar cane based ethanol. Ethanol from sugar cane has key benefits over corn based ethanol because it is more energy efficient and is easier to grow and process, thereby reducing overall costs.

Brazil’s automobile has upgraded to run on pure ethanol or gasoline-ethanol blend. California based alternative vehicles developer and distributor ZAP has teamed up with local company in Brazil called Obvio! to launch such cars in the U.S. market. Rotoblock Corp. has teamed up with Obvio! to provide advanced propulsion systems for the engines.

Mining Opportunities
Chile is the largest copper producer in the world and with copper prices rising so is Chile’s GDP. Argentina has abundance of natural resources and GDP growth of over 8% in the past few years. GoldCorp Inc GG, Golden Peaks Resources Ltd GL and Barrick Gold Corp ABX all have strong presence in Argentina and reaping-in most of the profits.

  • GoldCorp Inc. currently owns 37.5% of a gold and copper producing property in Argentina.
  • Golden Peaks Resources Ltd., an exploration and resource development company holds more than 385,000 acres of prospective land holdings in Argentina with main focus on gold projects.
  • The world’s leading gold company, Barrick Gold Corporation, has global operations that include various South American locations such as Peru, Chile and Argentina and plan to invest more than $1.5 billion.
Conclusion: Emerging markets can be volatile at times due to the region instability, terrorism and political risk factor. However strong demand across sectors such as renewable/alternative energy, technology, consumer electronics, digital media, mining and transportation provide good long term opportunity. Many speculate that with already drastic growth in emerging markets, the future might not be great. However the demand in emerging markets is still strong and with continued political and economic stability, emerging markets is still a good buy.

Recommendation: I recommend to look into companies that have presence in the emerging markets and not tied down only by US market. As discussed in this article, companies like IFSG, ZAAP, ROTB, GG, GL, ABX all hold good promise for the future with their presence in emerging markets.

Posted in Emerging Markets, Industry News | Leave a Comment »

Global Markets: When U.S. Economy Goes Down…

Posted by rantaboutit on January 22, 2007

There are alot of investing opportunities outside U.S. In the recent years, alot of portfolio managers are recommending their clients to invest in emerging and other developed markets. The reason being obvious is the concern over things not going well in the U.S. Everyone talks alot about China and India as good bets in the emerging market category.

How does China and India perform when the U.S. economy is lagging ?
I believe not. China and India rely highly on the U.S. economy. With U.S economy and markets performing poorly impacts Chinese hardware and manufacturing exports and Indian software exports.

So who performs well when the U.S. economy is lagging ?
Few developed countries that still do well are: Australia, Ireland, Norway & Sweden. These countries do well because they dont rely too heavily on the U.S.

Other emerging market is Chile. They rely on exporting copper, similar to Brazil. China is still a good bet even though it is reliant on U.S. Vietnam is also gaining alot of interest from investors. Spain also holds alot of promise.

Rule of thumb: While investing in foreign markets, there is always going to be some surprizes and disappointments. This has to be always taken into consideration beforing investing your money in those markets.

Another good way to get started by investing in foreign markets is buying Exchange Traded Fund (ETFs). If you do not understand what are EFTs read here –> EFT explained or wait for my upcoming post on EFTs. :))

Some of the EFTs i recommend are

  • iShares MSCI Australia Index Fund EWA
  • iShares MSCI Sweden Index ETF EWD
  • Irish Investment Fund Inc. IRL
  • iShares MSCI Hong Kong Index Fund EWH
  • iShares MSCI Spain Index Fund EWP
  • The India Fund Inc. IFN
  • iShare FTSE China 25 Index FXI

Posted in Dollar, Economy, Emerging Markets | 2 Comments »