Favorite emerging markets

Investors are attracted by emerging markets again and the current economic recession even helps them. Of course, they faced declines about one fifth to one quarter higher than the U.S. or Europe as a whole. But then again led strong recovery.

Emerging vs. developed markets.

For example, if fund focused on the U.S. added since the beginning of this year about 12 percent, the fund focused on emerging markets is 46 percent up.

China is currently the biggest driver of world economy and by a series of analysis emerging markets are expected to recover from the crisis more quickly than the developed countries. Orientation of their economies and the performance are often associated with prices in commodity markets.

In general emerging countries have good state of public finances (with exceptions like the Baltics and Hungary). Anti-crisis interventions have proved to be effective and also low interest rates support the growth. In some markets we can talk even about credit expansion.

Optimism about emerging economies were to much excessive that in past two months buyers took break and those markets were growing in slower pace than global average. Now they appear again very interesting. The trend should continue also in 2010. The advantage is the health of the financial sector without major shocks or collapse.

Current stock valuation is on the same level for both, emerging and developed markets. This again favors emerging markets together with better growth prospects, lower debt and functioning financial system, effective government interventions.