Emerging Markets… A Contrarian Take

by Louis Basenese, Advisory Panelist

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To say emerging markets are hot right now is an understatement.

The benchmark MSCI Emerging Markets index is up 52% this year, rendering the S&P 500’s 11% uptick completely insignificant.

Thanks to the strong performance, investors’ love affair with emerging markets keeps getting steamier. Case in point – investors poured $10.6 billion into emerging markets mutual funds so far this year, a whopping 34 times the total invested in U.S. funds.

Yet, while most pundits shout from the rooftops that emerging markets are the place to invest right now, let me offer a dissenting opinion.

Three Reasons Emerging

A long-awaited reversal in the monumental global stock market rally since early March finally arrived last week. As the first-quarter earnings season started winding down and post stress-test capital-raising weighed on some banks, investors were faced with a slew of gloomy economic reports suggesting the recent optimism about a global recovery might have been premature.

“This week, the hard economic data remind us that the global recession is ongoing: exports remain deep in the red; retail sales disappoint; inflation still volatile on food and energy but down on year; and industrial production declines. However, the data are consistent with the story of a slowing economic decline, foretold by several ‘green shoot’ survey reports,” said Rebecca Wilder (News N Economics).

Source: Tom Toles, Washington Post.

“Less bad” economic reports provided investors with little comfort, sparking a reassessment

Bald Eagle Energy, Inc., (BEEI.OB), a growing oil and gas exploration company, credits its success to a tightly knit group of seasoned business and industry veterans, all of which are focused on efficiency. The company builds shareholder value with a business model that stresses reduced capital expenditures, which includes taking care to hire the best rather than the many.

Heading the company’s minimized management team are two internationally known business professionals:

• Andrew S. Harper, CEO, has an extensive petroleum geology background, with nearly 30 years of international oil and gas exploration and development experience, including 21 years with industry giant ARCO.

He came to Bald Eagle Energy from China based MI Energy Corporation, where he was President of the International Division and Chief Geologist. During his tenure, production increased from 400 to 13,000 barrels of oil per day.

Before that he was a well