www.bethelfinance.com
Israel’s multilane Ayalon Highway runs parallel to the Mediterranean Sea, past Tel Aviv’s skyscrapers, funneling traffic to its wealthy suburbs.
The La Guardia exit leads to Google Inc. (GOOG)’s research and development center, which co-developed the auto complete function of the company’s search engine. At the HaShalom interchange is Check Point Software Technologies Ltd. (CHKP), the world’s No. 2 software security firm. Get off a few miles farther north and you reach Herzliya, where a team of Microsoft Corp. (MSFT) engineers developed a free anti-virus program.
The tech giants were lured by Israel’s educated workforce and gross domestic product per person of $31,000, which the Organization for Economic Cooperation and Development says ranks it among developed nations. And the country of 7.8 million people has more startup companies per capita than the U.S., Bloomberg Markets magazine reports in its March issue.
Yet by the standards of bond investors, Israel is still an emerging market, on a par with Brazil and Turkey.
Israeli bonds and the shekel are covered by emerging- markets strategists at Barclays Plc, Citigroup Inc. and Goldman Sachs Group Inc. JPMorgan Chase & Co. includes the country’s local-currency debt in its emerging-markets indexes.
$370 Billion
The task of classifying countries as developed, emerging or frontier has gotten increasingly difficult in recent years, investors and fund managers say. A lot is at stake: More than $370 billion of assets were benchmarked to the MSCI Emerging Markets Index (MXEF) as of Feb. 7, according to Bloomberg data. Some $430 billion followed JPMorgan emerging-markets bond indexes as of Nov. 23, 2011.
Since the collapse of Lehman Brothers Holdings Inc. in 2008, rich countries have been traversing one of the roughest economic patches in decades. At the same time, emerging nations that were once considered hazardous bets -- from Argentina to Thailand -- by some measures are more stable than their developed counterparts.
When it comes to debt, for instance, some emerging markets are rated higher than developed nations. Among emerging markets, Standard & Poor’s rated the government debt of Chile as A+ and South Korea as A.
Spain also is rated A, while Portugal, with a BB, and Greece, which was downgraded to the junk level of CC on July 27, score lower. All three European markets are on the MSCI developed-nations list.
Declining Risk
“Emerging markets were riskier in the past, but now the situation has changed at a very rapid rate,” says Mark Mobius, who helps oversee $40 billion as executive chairman of Franklin Templeton Investments’ Emerging Markets Group. “The whole rationale of why emerging markets were exciting was because the potential of growth was much bigger.”
The level of price swings and risk in emerging markets is becoming similar to that of developed markets. The volatility of the MSCI Emerging Markets Index, which includes 820 companies from the 21 developing nations, shrank to 22.3 in 2011 from 40.7 in 2008. That compares with 21.6 for the MSCI World Index (MXWO), which consists of 24 developed-market countries.
Volatility measures the relative rate at which the price of a security moves, using the annualized standard deviation of daily changes.
No comments:
Post a Comment