The stocks of companies based in developing nations look attractive on both valuation and growth measures. On an earnings-per-share basis, emerging markets sell for half to three-fourths the multiples of stocks in developed markets. As the world rebounds from recession, many emerging markets have resumed growth. Top prospects include:
- China, helped by the growth of regional Asian trade, is developing into a world manufacturing center.
- India, which traditionally has had a controlled economy, is opening to investors.
- Brazil has low-priced stocks and a new administration that has been surprisingly supportive of capital markets.
- Mexico benefits from its proximity to the U.S.
- Russia has budget and trade surpluses and is becoming a major energy producer.
- In Eastern Europe, Poland, Hungary, and Czech Republic are ready to enter the European Union and adopt the euro as their currency.
- Turkey is well-located between Europe and a potentially revived Iraq.
- Many mutual funds and closed-end funds offer investment opportunities in these emerging markets.