Emerging-market stocks have returned to life — but how long can it last?

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May 16, 2009 11:04am NYSE:BRF

confusedMSCI’s emerging-market index is up about 23% this year, down from year-to-date gains of about 28% last Friday. Investors have poured into emerging-market stocks and currencies as they redevelop a taste for risk. Brazil is one case in point — lately, run-ups there have been so sharp that central banker Henrique Meirelles said recently that an excess of optimism could be dangerous, and lead to disappointment at the first negative number……

……Yesterday, Van Eck Global launched an exchange-traded fund of Brazilian small-cap stocks (BRF) (SEE RELATED STORY), an investment play on Brazil’s growing consumer class……

……For gains to continue over the longer haul, company earnings will have to rebound, says David Semple, director, international equity, at Van Eck. Most emerging markets now appear “fully valued” on a forward basis, but earnings should also be troughing, he says. Rising earnings and estimates would presumably keep valuations attractive going forward, helping the rally continue. 

Full Story: http://blogs.wsj.com/marketbeat/2009/05/15/watch-for-falling-brics/



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