The Safest Emerging Market?
Apr 14th, 2008 | By Andrew Mickey | Category: International InvestingWe’ve been hearing it for years: “You’ve got to be in emerging markets.”
Although they’ve had an incredible run, we’ve got to remember there’s a reason we still call them emerging markets. With that status comes a significant amount of risk. I don’t care what’s happened over the past five years; I care what’s going to happen over the next two. What goes up must come down. The greater the upward run, the greater the risk in the future.
Just take a look at the chart above. Over the past three months the Dow has declined 5%. The MSCI India ETF (INP:NYSE) is off 15% and the FTSE/China Xinhua Index (FXI:NYSE) has fallen more than 40%. That’s a lot of risk. These emerging markets truly are emerging, and there’s going to be a lot of volatility.
There is, however, one emerging market that performs like a developed one: Russia. While India and China were getting crushed, the Russia Market Vectors ETF (RSX:NYSE) has done just as well as the Dow. After a quick correction of about 15%, the Russian stock market has resumed its climb and is down a mere 5% over the past three months.
When it comes to emerging markets like India and China, I’ve taken a “buyer beware” approach. Thanks in part to Vladimir Putin’s “stabilization” policies, Russia has avoided the volatility of other emerging markets and shown it has a less risk. Learn how to take advantage of the safest emerging market here.
Good investing,
Andrew Mickey
Editor in chief, BreakAway Investor
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