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Jul
17
Jonathan Yates
Is It Time to Get Back into Emerging Market Stocks?
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As the Dow Jones Industrial Average (NYSE: DIA) and Standard & Poor’s 500 Index (NYSE: SPY) continue surging into record territory there is naturally concern among investors.  Unemployment is still high in the United States.  Economic recovery has not been that strong.  And trading partners such as Japan and Europe are in economic slumps, if not depressions.

As a result, increasing attention is being paid to stocks in emerging market nations.  Over the course of The Great Recession, emerging market nations continued to grow as economies contracted in the United States and Europe.  But economic growth has been down recently in China, India, Brazil and Russia.  Those four countries were known as the “BRAC” nations.

The chart below shows how the exchange traded funds for China (NYSE: FXI) and Brazil (NYSE: EWZ) have fallen as the SPY continues soaring.

With this disparity, stocks in emerging market nations are becoming more attractive.  Investors who do want to “buy low” should look at dividend paying stocks in those countries.  Utilities and oil companies are ideal for this.  Those are sold industries that should do well, no matter what the economic conditions.

China Mobile (NYSE: CHL), the world’s largest mobile phone company is one to consider.  Another is Petrobras (NYSE: PBR), a major oil company based in Brazil that has plunged.  YPF (NYSE: YPF), an Argentine oil company is still very low, but has rebounded.

When investing abroad, it is good to go with stocks that pay dividends.  Actually, those are the most attractive stocks no matter where the headquarters.  Paying a dividend forces the company to respect the rights of all of the shareholders.  It also guarantees an income flow to the shareholders.  For a company based abroad, that is a very comforting feature for a stock.



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