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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.

Among the markets favored these days by those in the know:Turkey, South Korea, Israel, India, China, South Africa, and Brazil.

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)

To deal with the uncertainty, Huntington has been “cautious, playing it defensively,” he said. “We have been buying stocks like Hyundai Motor , which you would consider to be exposed to the economy. But, it’s actually a market share gain play versus a lot of Japanese manufacturers.”

Two more of his favorites: LG Household , because of its consistent earnings and growth potential; and Korea Reinsurance, because Huntington considers it undervalued.

Yet not all foreign investment must be far afield. Take Canadian energy companies, for instance.

“If you look at how the oil patch has fared as a part of the economy in Canada, it’s actually fared quite well,” said Ari Levy of TD Asset Management. “Some of the stocks have been hit on operational issues, but we think they’re now poised to move up and they’re trading at very attractive valuations.”

Among his favorites: SunCor , based in Calgary. “We think it’s a very well-managed company….Companies generally grow for growth sake, and this is an exception. At this point, they’re going to grow only if it’s profitable.”

Another favorite is Canadian Natural Resources , also in Calgary, because its portfolio is diversified in terms of assets and geography. The company has operations in western Canada plus Africa and the North Sea.

Finally, Talisman , also Calgary-based, is well-positioned in Asia — particularly in Vietnam, Malaysia, and Indonesia.

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