Investing Abroad? Experts Offer Their Advice
Investing abroad always poses risk. You can’t be sure there won’t be a border skirmish or a coup or rocketing inflation. If you’re careful, though, you can profit nicely in overseas markets, some with double-digit year-over-year growth.
In a series of reports on global investment Thursday, CNBC reporter Jackie DeAngelis used Israel as an example, citing its long-standing tension with Iran as a negative drag on the Tel Aviv stock exchange, whose member companies are known for strong growth and cutting-edge investing opportunities.
But while the exchange is up 3 percent year to date, it suffered a summer swoon as the story began to emerge that Israeli Prime Minister Benjamin Netanyahu was considering a strike on Iran before the U.S. Presidential election.
Meanwhile, there’s another worrisome Middle East situation: the conflict inside Syria. Rebels are flocking to Turkey — with whom Syria shares a border — a situation that is costing Turkey because it is sheltering the rebels.
Turkey is the fastest-growing economy in Europe at the moment; its economy is poised for 3 percent growth this year, and 4.6 percent next year, according to the OECD. The Istanbul stock exchange is up 30 percent so far this year. (More:Slideshow: Investing in Turkish Art)
In Asia, a decent investment play is India, according to Geoffrey Dennis, global emerging markets strategist at Citigroup The Bombay Sensex Market is up about 11 percent this year, outperforming the S&P 500.
“It had a very nice run early in the summer when oil prices were coming down and commodity prices were under downward pressure, because it imports a lot of its oil and relies on a lot of commodity imports as well, so it tends to do well when commodity prices come down,” Dennis said. “So those are some of the factors behind the decent performance here.”
Dennis said he likes emerging markets for the rest of the year — with upside around 10 percent. But he said India may underperform other markets.
“That’s because the central bank in India has a much tougher job in managing monetary policy than is the case elsewhere in emerging markets because inflation is quite high — around 8 percent to 9 percent,” Dennis said. “So they don’t have a lot of room to reduce interest rates in the face of what has been a very sharp slowdown recently by Indian standards.”
Dennis said his other favorite emerging markets are China, Brazil, South Korea, and South Africa.
Another fan of investing in South Korea...
Another South Korea fan is Paul Attwood, manager of Huntington’s Global Select Markets Fund . Two of the fund’s top five holdings are South Korean companies.
“With that said, we have a little bit of a concern shorter-term in South Korea,” Attwood said. ”There are opportunities there for investment, but the economy is so export-driven, particularly to China. With the slowdown in China, and with the obvious problems in Europe, and a potential slowdown coming in 2013 for the U.S., we are a little bit cautious on Korea short-term.
“Obviously for the long term it is still one of our favorites,” he said. (More:Investing in Europe’s Fastest-Growing Economy)