We think these three emerging market countries Malaysia, Philippines and Thailand offer better opportunity at this time than the emerging markets index, or the popularized BRIC countries Brazil, Russia, India and China. Lets see why.
Once plagued by a 1997 financial meltdown that required bailouts from the International Monetary Fund, the smaller economies of the Far East have come roaring back. Stock markets in Thailand, the Philippines, Malaysia and other Far Eastern nations are best picks for investors in the emerging market countries.
While Chinese and Japanese stock markets struggle, the trend is up for Thailand, the Philippines and other Far Eastern bourses.
Those three selections are in the group of emerging market countries with positive total returns for 10 years, 5 years, 3 years, 1 years, YTD and 3 months, while the BRIC countries have negative total returns for 5 years. Figure 1 based on MSCI index data makes that point.
Because the Thailand and Philippines ETFs do not have 10-year operating histories, it is helpful to look at charts of the MSCI indexes, as rendered by MSCI, for those countries, which have long histories. Figure 6 plots the MSCI total return of the select countries versus the MSCI emerging markets. Figure 7 shows the BRIC country total returns against the emerging market index.
On a 10-year basis the BRIC countries have done better than the emerging markets index, and the select countries (except for Thailand) have underperformed. However, more recently, the select countries are trending up while the BRIC countries are trending down.