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Jun 27 2008

Friday Snapshot 6/27/08: Taipan Emerging Market Index Gets Caught in Down Draft and Falls 30.7%

Published by Irwin Greenstein under Frontier Market, Global Markets, Southeast Asia, Taipan Emerging Market Index

With the markets getting crushed, it should come as no surprise that our Taipan Emerging Market index gets caught in the down draft. For the week ending 6/27/08, the index dropped 30.7%.

Key
ALL ORDINARIES IDX (ASX: ^AORD) Australia
BSE SENSEX (Bombay: ^BSESN) India
IBOVESPA SAO PAULO (^BVSP) Brazil
EGYPT CMA GENL INDX (Cairo: ^CCSI) Egypt
HANG SENG INDEX (HKSE: ^HSI) Hong Kong
COMPOSITE INDEX (Jakarta: ^JKSE) Jakarta
COMPOSITE INDEX (Kuala Lumpur: ^KLSE) Kuala Lumpar
KOSPI Composite Index (KSE: ^KS11) South Korea
MERVAL BUENOS AIRES (Buenos Aires: ^MERV) Argentina
IPC (Mexico: ^MXX) Mexico
NZX 50 INDEX GROSS (NZSE: ^NZ50) New Zealand
IGBM (Madrid: ^SMSI) Spain
TEL-AV TASE-100 IND (^TA100) Israel
TSEC weighted index (Taiwan: ^TWII) Taiwan
SSE Composite Index (Shanghai: 000001.SS) Shanghai
iShares MSCI South Africa Index (EZA) South Africa
RTSI INDEX (RUS: RTS.RS) Russia
ISHARES MSCI THAILAN (NYSEArca: THD) Thailand
iShares MSCI Turkey Invest Mkt Index (TUR) Turkey

The herd mentality of the major trading centers will usually prevail — regardless of the potential of individual emerging markets. You can see this with oil’s new highs triggering another sell-off. Yesterday, the Dow hit a two-year low. Citibank now seems like it will crumble and those reverberations are felt everywhere.

There is a bright spot, however…

Our biggest winner this week is the ISHARES MSCI THAILAN (NYSEArca: THD). This follows our trend for the past three weeks of Asian markets dominating the index.

Thailand has been on a tear of late. More and more major corporations are setting up factories there as China becomes too expensive.

Since January of this year, new manufacturing plants in Thailand have been announced by the likes of Japanese food giant, Ajinomoto Co.; the UK-based Plastics Capital; Toyota is building a new 150,000-square-foot diesel engine plant; Canon is doubling capacity for a printer plant outside of Hanoi; and Hanesbrands, the underwear maker, is setting up two new factories in Vietnam.

At the same time, Vietnam’s inflation hit 25.2% last month — one of the highest in our index.

Here’s my point: Vietnam has pretty much the same story to tell as other markets in our index. Some have higher inflation than others. Some haul in money from feeding the global commodity boom instead of manufacturing things. Yet, they are all dragged down by the horrible and terrifying stories making headlines in the U.S. and other industrialized countries.

All I could say at this point is that you have to wait this out. Is this a good time to double down? Very possible. Regardless, the long-term prospects of emerging markets remains quite strong.

Have a great weekend.

–Irwin Greenstein

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Jun 23 2008

Will Turkey Bounce Back for Long-Term Gains?

Published by Irwin Greenstein under Construction Industry, Eurasia, Global Markets, Inflation

If you look at the chart of the Istanbul Stock Exchange your gut instinct is to cut and run. But is that the best strategy for an emerging market with great upside potential?

Like other emerging markets, Turkey is taking it beating from inflation. So far, the government’s policies have kept inflation below 10% — putting it a notch above China.

Let’s face it: inflation is wreaking havoc on all markets, including the U.S. In fact, inflation is probably the biggest cause of volatility in emerging markets today. For investors, that leaves that basically leaves two choices: 1) go into something stable like bonds or 2) get in at the bottom and ride out a market that has the legs for long-term growth.

Turkey’s economic fundamentals tell me that long-term growth is the way to play the Istanbul Stock Exchange. And the best way to get in now is through the ISE National 100 Index. Since it reflects the performance of the Istanbul Stock Exchange, the chart below may lead you think that Turkey is in deep trouble. However, if you discount the effects of inflation, Turkey has the potential to be a good place to put your money for the next few years.

One of the most important aspects of investing in emerging markets is government stability. The largely Muslim nation is on a quest to make important reforms for the 21st century.

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Jun 20 2008

Friday Snapshot 6/20/08: Taipan Emerging Market Index Down 35.7%

Published by Irwin Greenstein under East Asia, Global Markets, Taipan Emerging Market Index

For the first time since we’ve compiled our index, we’ve experienced a loss. Not too bad really, given the insanity of markets everywhere.Inflation is wreaking havoc this week, ripping through emerging markets like a typhoon. Hopefully by next week, we’ll have clear skies.

Our biggest winner this week is the Shangahi SSE Composite Index. We had written about it in the June 11 issue, suggesting it was time to perhaps double down. Even though it was our biggest winner, we missed the mark. It dipped 7.6% since that article.

Hold tight. Keep the faith. Our first loss is always a bruiser. Have a great weekend.

–Irwin Greenstein

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Jun 13 2008

Friday Snapshot 6/13/08: Taipan Emerging Market Index Up 14.7%

Published by Irwin Greenstein under Australia, Global Markets, Taipan Emerging Market Index

Our Taipan Emerging Market Index is up today by 14.7%. Although this is a decline from last week’s stellar gain of 44.2%, we still managed to beat the S&P 500 and Dow Jones Industrial Average.

As of this writing, the Dow was down 32.5% and the S&P 500 dipped 5.8% since Monday. Despite the grim inflation numbers for many emerging markets, our index still managed to outperform the two major U.S. exchanges.

Asia continues to dominate our index. Last week Hong Kong’s Hang Seng Index (HKSE: ^HSI) came out the big winner. This week, it’s Australia’s ALL ORDINARIES IDX (ASX: ^AORD).

^AORD enjoyed growth across all major sectors — reflecting the general health of the Australian economy and the government’s successful efforts to control inflation.

Today, Federal Treasurer Wayne Swan said that Australia’s economy has been remarkably resilient in the face of financial turmoil, and is well placed to remain in good shape.

Robust growth in emerging economies had boosted Australia’s terms of trade, countering the impact of slower global growth, tighter credit conditions and higher domestic interest rates, he said.

But he also warned inflation would remain a challenge for the economy.

Bloomberg reported last week that Australia’s economy grew twice as fast as economists forecast in Q1. Gross domestic product rose 0.6% from Q4, when it increased a revised 0.7%, according to the Bureau of Statistics in Sydney. Exports of iron ore and wheat, in addition to construction, saw the highest growth.

Overall, it looks like Asia is still the place to put your money, despite inflationary pressures.

Have a great weekend.

–Irwin Greenstein

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