Emerging Markets
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Emerging Markets: Is This A "New Chapter" for Turkey?
In 2012, Turkey was the best performer among the emerging markets we track on our Periodic Table showing a decade of returns. All developing countries rose last year, but stocks in Turkey climbed an astounding 56 percent.
See a decade of results for yourself with our interactive periodic table
While visiting the country last week, I was happy to see my explicit knowledge of Turkey's growth was supported by my tacit knowledge.
Istanbul has been in the midst of a fantastic transformation from an impoverished population to one of affluence. Popping up among the beautiful Ottoman mosques, Byzantine churches, palaces and bazaars are ultra-contemporary art sculptures, shopping malls and lush landscaping.
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Emerging Markets 2013: The Unsung Gems of Latin America
For investors in search of growth in 2013, one of the best places to look is in emerging markets, particularly in the often-neglected region of Latin America.
While most of the talk about investing in emerging markets over the past several years has focused on Asia, particularly China and India, Latin America has been quietly enjoying a nice little boom of its own.
The International Monetary Fund (IMF) projects economic growth in Latin America at 3.2% for 2012 and 3.9% in 2013, compared with growth in the United States of just 2.2% in 2012 and 2.1% in 2013.
But several of the emerging markets of Latin America should perform much better than the regional average.
For example, the IMF estimates the gross domestic product (GDP) of both Chile and Colombia will grow 4.5% in 2013, while Peru's GDP will rise 5.8%, Panama's 7.5% and Paraguay's an eye-popping 11%.
Investors in search of growth clearly need to consider the emerging markets in Latin America.
"Latin America as a whole has averaged 4% real growth in the last decade, far more than you would have gotten in Europe, North America or even much of Asia outside of China and India," said Money Morning Global Investing Strategist Martin Hutchinson.
Still, investors need to research the region before going shopping. Not every Latin American country is a winner.
"The region remains a minefield for investors," Hutchinson said, noting that many of its governments are left-leaning and prone to policies that hurt business.
The Wall Street Journal recently described the emerging markets of Latin America as "a tale of two economies" with the philosophy of the political leadership determining which is which.
"The global slowdown of the past two years has created a divide in the region between countries that pushed a more aggressive free-market agenda and kept a tighter grip on the public purse and those that used the swell in coffers from rising commodity prices to embrace a bigger role for government in the economy," the Journal said.
The key to investing in the emerging markets of Latin America in 2013, then, is looking at the countries' government policies to sort out which are the darlings and which are the dogs.
Lucky for you, we already did the research...
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The IMF's Change on Capital Controls Adds Danger for Emerging Market Investors
The IMF is up to no good again.
On Monday they released a new report on international capital flows which relaxed its opposition to exchange controls.
By doing so, the IMF has now made emerging market investments more risky, especially for retail investors.
What's more, they likely imposed a major new cost on the global economy.
The irony is that the IMF is trying to solve a problem that was caused by foolish global monetary policies. Relaxing its opposition to capital controls is just more of the same.
Removing Federal Reserve Chairman Ben Bernanke and his world-wide sympathizers, and restoring a true free global capital market would work much better.
The IMF does correctly note that capital flows have vastly increased in recent years. That's where the initial problem comes from. It's the solution that's dangerous.
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Emerging Markets Stocks 2013: Don't Miss These Next Waves of Growth
Amid a turbulent market environment in 2012, emerging markets stocks have been, well, turbulent.
Some markets (Colombia, Mexico and Thailand to name a few) have performed well. Others have disappointed (Brazil and Russia stand as two laggards.)
But as Money Morning Global Investing Strategist Martin Hutchinson explained last week, economic growth has shifted to these developing economies.
"The IMF's World Economic Outlook projects anemerging marketsforecast with growth at 5.6% in 2013. That's down slightly from 2011 but far ahead of the measly 1.5% growth projected in the "advanced economies,'" wrote Hutchinson in his 2013 emerging markets forecast. "That means investors need to focus heavily their investments inemerging markets, as we have done successfully over the past few years."
Plus, there is no getting around the fact that emerging markets stocks are cheap. The broader emerging markets universe currently trades at a 20% discount to the developed world. And with that valuation discount comes the potential for growth.
But just because valuations are attractive that does not mean all emerging markets stocks are. It pays to be hyper-selective with this asset class.
That's why we've weeded out the weak and come up with some of the most promising emerging markets stocks for 2013.
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Investing in Emerging Markets: Don't Miss this Reliable Choice
South America, broadly speaking, is a dichotomy for investors.
On one hand, the continent's history is hard to forget. The Argentine currency crisis and Colombia's reputation for nefarious exports are just two black marks on South America's past. A third is a rap sheet littered with leftist, socialist governments with penchants for chasing away foreign investment.
On the other hand, South America has offered investors some spectacular returns in recent years - and not all of those returns are attributable to Brazil.
Brazil grabs much of the attention paid to the Latin American investment thesis because it is the region's largest economy, but there are other countries there with stories worth listening to.
Colombia and Peru stand as two examples of South American countries that are not only easily accessible for U.S. investors, but also offer the potential for some pleasant surprises.
For example, since the market bottom in 2009, the Global X FTSE Colombia 20 ETF (NYSE: GXG) is one of the best-performing exchange-traded funds (ETFs) of any kind. Over the past decade, Colombia has worked hard to shed its image as the cocaine capital of the world. These days, the country is known as a growing oil producer, among other favorable traits, and one of the more open, progressive nations in the region.
However, there's another country that tells South America's best story.
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My Favorite Investment in the World's Newest "Sweet Spot"
Having lived in Singapore as a child I've always been fond of Southeast Asia.
Fifty years later, though, I like it for a slightly different reason. It's become a place where I like to invest.
In fact, I believe the region is the world's newest "sweet spot" for investors.
Of course, you don't hear much about the economies of Southeast Asia. Given the media's penchant for bad news, that alone should tell you something.
But unlike the U.S., Europe, China, India and Japan, the region is doing just fine, which is why you should consider putting some money in places like Malaysia and Singapore.
In fact, in a moment I'm going to tell you what my favorite company in the region is.
First, though, I'd like to give you a first-hand glimpse of the ongoing economic miracle in Singapore.
Because one thing is for certain: The place is gigantically richer than it was when I lived there as a child.
Needless to say, so much has changed since the new independent government took over from British rule.
At the time, most of our neighbors in Singapore were fearful of the change, and for good reason. Independence in other countries, notably India, had brought nothing but trouble and bloodshed.
However, my father reassured us. He said the new leader, Lee Kuan-yew, was both sensible and very able, so things would be fine.
Admittedly, father was no great shakes when it came to investments, but by George he knew his stuff on geopolitics. In the 50 years since then, Singapore has been just about the most successful society on earth.
My Favorite Investment in Southeast Asia
Today, the important thing for investors to know about Singapore is that it is now a rich country. Believe it or not, it's the fifth richest in the world. The United States is only 12th.
Singapore also ranks at the top on the World Bank's Ease of Doing Business Index, second on the Heritage Foundation's Index of Economic Freedom, and fifth on Transparency International's Corruption Perceptions Index.
In other words, your money is much safer in Singapore than it is at home, or even under the mattress!
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A Liberty Investor's Guide to Latin America
Words, indeed, are powerful things. As an Englishman in America, my personal favorite is freedom.
It's embodied by those words penned so long ago by a young Thomas Jefferson...
It's the idea that "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."
That's not only the foundation for what I believe, but it's also the basis for how I invest.
It's a technique I call "Liberty Investing."
As such I like to invest in countries and companies whose operations are compatible with freedom, as defined by the Founding Fathers and the best U.S. political and economic traditions.
To me, this is ultimately the right way to run both societies and companies. And when we follow them, our returns will be consistently superior over the long term.
The Foundation of Liberty Investing
Using my general Liberty Investment principle, I often look for a number of characteristics in the countries where I invest.
For instance, market signals should be paramount and government participation in the markets should be relatively low. The Heritage Foundation Index of Economic Freedom is a good measure of this.
Each country should also have a high level of integrity-meaning they follow the rule of law. A good score on Transparency International's Corruption Perceptions Index is a good measure of this.
They should also be generally free and democratic, and should have a fairly small government and moderate taxation. Interest rates also should be above the level of inflation, so they don't deprive their economies of domestic savings.
Finally the local bureaucracy should be reasonable to deal with. The World Bank has an Ease of Doing Business Survey that tells you this.
You see how this freedom-based investing technique works?
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