Emerging markets performance and investment outlook.

Brazilian Index BOVESPA was the top performing international stock index around the world. In US dollar terms (Brazilian Real has appreciated by 29 % against USD within the year) index is higher by 145 %.

But this doesn't seem to be the end of the story. In the region of Latin America, Brazil is still with reasonable P/E valuation 13.5. Other countries in region are Argentina 16.2, Chile 17.2, Peru 37.8, Mexico 20.4. Therefore it is better to be selective rather than going into the diversified Latin America funds. Brazilian funds look like good choice.

Favorite region among emerging markets, Asia Pacific, is traded quite high after strong 9 months rally. On average with 20 multiples of earnings. But still it is not overheated of not in the bubble. E.g. South Korean Index KOSPI is currently with P/E ratio 19.

The best investments among emerging markets, in terms of fundamental valuation, is Central and Eastern European region. EU newcomers, Bulgaria and Romania, are traded even below P/E 10. Bulgarian SOFIX with 8.1 and Romanian BSE Index with 9.5. Turkey has also big investment potential with current broad index ISE slightly more than 10 earnings multiples. Here are some key drivers for investment outlook in Turkey. In Central Europe, Czech Republic with 11.9 seems to be the cheapest.