Things are progressing here at Emerginvest quite well, but this week has been mostly development on behind-the-scenes code, so there isn’t too much too report. Aside from that, we know that you, our users, enjoy our site for one reason: a shared passion for global financial trends and emerging markets. In light of that, I wanted to start writing a series posts that would be more pertinent for you. Topics I have in mind are: highlighting global information portals, commenting on insightful articles, and our perspective on major financial topics like portfolio diversification. For the first of these articles, I wanted to expound upon the last post and aggregate a list of high-quality emerging market and global economic blogs. Most of these authors are financial advisers and economists and I have yet to find a place which combines this wealth of information. This is by no means an exhaustive list, so ...

By Jason Simpkins Associate Editor Merrill Lynch & Co. Inc. (MER) has raised its annual infrastructure-spending estimate for emerging markets by 80%, as developing countries try to keep pace with fast-growing economies and large cash reserves, BusinessWeek reported. Investment in infrastructure, which the firm sees as the long-term solution to inflation, will rise from $1.25 trillion to $2.25 trillion annually over the next three years. And China, the Middle East, and Russia will account for 70% of infrastructure spending. The report from Merrill Lynch pointed out that Xstrata PLC (OTC: XSRAY) recently predicted emerging markets would spend $22 trillion on infrastructure in the next 10 years. “That estimate is among the highest we’ve seen,” the report noted, “with an implied run rate of $6.6 trillion over the next three years.” Estimated Infrastructure Spending For the Next Three Year...

Knowledge of the country weights in the emerging and developed markets indices can be helpful in specifying allocations within the equity portion of a portfolio.

For those clients who wish to allocate primarily on a country basis (as opposed to a sector basis, for example), our general philosophy is to begin the design process from the starting point of world market capitalization, then deviate from there as appropriate per client.

More specifically, we recommend placing at least 50% of equity assets in broad index funds in proportion to world market capitalization. Then, depending on your degree of aggressiveness and your confidence in your assessment of markets, placing up to 50% of equity assets in regional or country funds with anywhere from minor to massive overweights or underweights.

In order to make a conscious overweight or underweight decision, you need to know the neutral weights.

The major weight categories, US (proxy VTI), non-US developed …

According to a new study from Merrill Lynch, there are 6% more millionaires today than there were a year ago. And the China, India, and Brazil had the sharpest increase in new millionaires.The number of millionaires increased by 22.7% in India last year, 20.3 % in China, and 19.1% in Brazil.The study also found that 103,320 had a net worth of $30 million or more , an 8.8% increase. "This year's report found that the number of high net worth individuals and the amount of wealth they control, continued to increase in 2007, with the greatest wealth being created in the emerging markets of India, China and Brazil."

There was an article in the NY Times Sunday titles “For Foreign Stocks, The Sure Bet Is Over.” As is often the case the headline writer sensationalized the article a tad but there are some important things to think about if you are one to invest in foreign equities one way or another.

A few years ago there were some especially cheap areas in foreign and emerging and many of those areas are no longer cheap. I saw elsewhere that Petrobras (PBR) used to trade with a mid single digit PE ratio, then a couple of years ago it had close to a US market multiple and now it’s higher than the US market. This isn’t necessarily a reason to buy or sell the name, if oil does go to $200 in short order, as some think, PBR is likely to go along regardless of the valuation.

PBR is an example …

We are sometimes asked why emerging markets are so much more volatile than developed markets. The answer is that, due to their relative size, money flows between them cause most of the volatility effect.

Consider a real world situation that most of us have seen — a stream emptying in to a pond and another stream at the the other end of the pond draining the overflow.

Think of the streams as the emerging markets and the pond as the developed markets. Think of the water as money.

The water in the stream feeding the pond moves quickly. When the water enters the pond, it slows as it spreads out in the breadth and depth of the pond. When the water enters the stream draining the pond overflow, it moves quickly again.

The streams are narrow and shallow by comparison to the …

Simple arithmetic charts are OK for short-term performance review, but can be misleading for long-term purposes. Semi-log charts are best for long-term perspective.

Arithmetic charts space each Dollar move equally on the vertical Y-axis. Semi-log charts space each percentage move equally on the vertical Y-axis. Either method creates only minor differences for short-term charts, but dramatic differences over the long-term, particularly if the security is strongly trending.

The following charts of MSCI emerging market indices illustrate the point. They show 15+ years of gross performance (price plus all dividends) for the emerging market index (proxies: EEM, VWO), India (proxy: INP), China (proxy: FXI), Brazil (proxy: EWZ), Russia (proxy: RSX) and Mexico (proxy EWW).

The semi-log format (called “semi” because the X-axis remains arithmetic with equal spaces between dates) gives a truer picture of trend.  A constant rate of change on

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Source: Mineweb.com 06/09/2008
Since the onset of the so-called supercycle, around early 2002, commodities have increasingly gained the reputation of being a hedge against everything - except, now, so it seems, commodities.

In the past few days, crude oil prices have surged into unchartered territory, close to $140 per barrel, closer to an as-yet unknown “choke point”, where oil will demonstrably unleash serious damage on the global economy. Today’s oil prices are the highest - in inflation-adjusted terms - seen since the 1860s, an event that triggered the Pennsylvania oil boom. In the modern era, oil crises were seen in the mid-1970s, when prices topped $45 a barrel in today’s money, and then $90 a barrel in the early 1980s.

In their most modern manifestation, commodities have also increasingly emerged as a separate asset class, and, when seen as a “hedge against everything”, offer indirect exposure to emerging markets industrialization, …

Yesterday I posted about new ETF iShares MSCI Eastern Europe (IEER.L). Let’s have a look to key fundamental indicators of countries included in the fund. Russian index RTX, Polish WIG, Hungarian BUX and Czech PX.

Country/Region
DivYld
P/B
P/CF
FY0 P/E
12M
Trailing P/E
FY1 P/E

Russia
0.98
2.24
13.91
13.22
10.35
11.6

Poland
2.78
2.25
9.14
12.73
12.39
11.94

Hungary
2.6
2.37
6.4
10.23
9.83
9.36

Czech Republic
2.96
2.82
8.52
15.49
18.39
13.62

Central European countries provide high dividends. On average dividend yield in Emerging countries is 1.91. Also P/E ratios are better than average. …

Seymour talked about emerging markets and pointed to Brazil’s relatively low inflation (4.5%) and strong currency. Plus, the Brazilian economy is smoking hot right now, and consumers in the country are spending. Seymour recommended three stocks, including Unibanco, Perdigao, and Companhia Sanea. Track the performance of these stocks at: http://www.trackthepros.com/categories.php?category_id=161 Also, his 18 Global Trades recommended on 3/12 are doing quite well overall….11 of the 18 are beating the S&P 500 Index, 5 are negative, and 2 are positive but below the index: http://www.trackthepros.com/categories.php?category_id=696