Fundamental Analysis for Emerging Markets

Since mid-May we have been in correction mode in stock markets globally. Some indexes are approaching and testing March lows. Let's have a look at fundamental indicators for emerging markets.

There are some exceptions, but generally, we are below P/E valuations of 20. This is a very interesting level for markets that still have high estimated growth, such as China or Brazil. From a P/E ratio perspective, Turkey is the winner where the indicator is even below 10. It is also the cheapest based on Price / Cash flow ratio and the market with one of the highest dividend yields.
 

Emerging Markets	Div	P/B	P/CF	P/E
Argentina	0.85	3.11	10.75	16.24
Brazil	1.09	2.63	6.89	18.11
Chile	2.68	2.29	8.56	18.01
China	1.56	3.15	12.35	19.75
Colombia	1.81	1.34	8.05	16.12
Czech Republic	2.82	3.16	9.29	16.71
Egypt	2.17	4.43	11.42	16.56
India	0.94	4.53	14.48	21.1
Indonesia	2.03	3.83	12.93	20.11
Israel	2.81	2.17	9.27	14.49
Jordan	1.64	2.42	16.64	19.01
Malaysia	3	1.78	8.27	13.25
Mexico	1.22	3.41	9.32	15.33
Morocco	2.09	4.45	19.94	28.7
Nigeria	1.92	4.54	6.3	27.18
Pakistan	4.45	2.54	7.98	11.27
Peru	2.95	4.27	12.62	14.86
Philippines	2.91	1.8	7.42	12.66
Poland	2.88	2.21	9.43	12.4
Russia	0.9	2.46	15.06	15.02
Slovenia	0.95	2.41	12.7	25.72
South Africa	2.85	2.94	10.82	14.56
Taiwan	3.39	1.94	7.31	15.57
Thailand	3.6	2.07	8.05	14.63
Turkey	3.62	1.69	5.35	9.46

Disclosure: None

Comments

[zawy]

Don't forget singapore. PE is 14, inflation is a shockingly low 1%, and growth is among the best. It's the new new york. A uniquely independent and mixed center of Asian business and culture and one of the most trusted markets in the world. Housing has always been expensive there and has not gone up much in the past 8 years. A fantastic place for the young and food lovers, it will continue to be a center of biomedical research and the business and cultural elite. What country has a better personality and looks so happily towards the future?

Another bet similar to the Brazil play (good growth and net exporter of oil and food), Malaysia is in a similarly great situation with a 23% lower PE than Brazil and lower inflation and equal growth. Malaysia surprisingly (to me) has one of the most trusted markets in the world, better than Brazil and Australia. Malaysia also has better P/B and dividends. FSLR chose it as it's home for new high-tech solar plants. Also compare Malaysia to Thailand: similar PEs even after a recent 20% drop in Thailand, Thailand is oil-dependent, higher inflation, similar growth, less-trusted market, and current political risk. Only thing good about thailand is that it makes a lot of cars (for foreign companies) that could get sold to china.

[kaps]

Inflation in Spore is 1%?? Check your stats again..it is nearly 6-7%. 0.5-1% is the central bank target.

[GeorgeSpritzer]

MXF has annual tender offers where you exchange your MXF shares at NAV in return for Mexican securities. This is a good deal, since MXF sells at a double digit discount to NAV.

But in order to do this efficiently, you need a large position (at least 100K) and use a broker who can sell shares on the Mexican stock exchange.