CHAPTER 1: THE FIVE WS OF EMERGING MARKETS
CHAPTER 2: LIONS, TIGERS & DRAGONS, OH MY!
CHAPTER 3: LATIN AMERICA AND THE VAGARIES OF BOOM AND BUST
CHAPTER 4: FROM THE RUBLE OF THE IRON CURTAIN TO THE LEGACY OF THE APARTHEID
CHAPTER 5: FROM THE PAST TO TODAY—HOW TO APPROACH EMERGING MARKETS
CHAPTER 6: DEVELOPING PORTFOLIO DRIVERS
CHAPTER 8: PUTTING IT TOGETHER
[6] Central Intelligence Agency, "The World Factbook," (July 15, 2009), https://www.cia.gov/library/publications/the-world-factbook/index.html (accessed July 15, 2009).
[7] Deborah Potter, "Handbook of Independent Journalism," (July 2006), http://www.america.gov/media/pdf/books/journalism.pdf#popup (accessed April 21, 2009).
[8] Central Intelligence Agency, "The World Factbook," (July 15, 2009), https://www.cia.gov/library/publications/the-world-factbook/index.html (accessed July 15, 2009); International Monetary Fund, "World Economic Outlook," (April 2009). http://www.imf.org/external/pubs/ft/weo/2008/01/weodata/index.aspx (accessed April 21, 2009). Data are based on the "Emerging and developing economies" category as defined by the IMF.
[9] Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing, or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability, and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits), or any other damages.
[10] The World Bank, "Key Development Data & Statistics," http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20535285~menuPK:1390200~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html (accessed April 21, 2009).
[11] See note 4.
[12] Standard and Poor's, "Company History: Historical Timeline," http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/aboutsp_ch/4,2,2,0,0,0,0,0,0,0,0,0,0,0,0,0.html?lid=us_topnav_comphistory (accessed April 21, 2009).
[13] Antoine van Agtmael, The Emerging Markets Century: How a New Breed of World-Class Companies Is Overtaking the World (New York City: Free Press, 2007). The previous paragraphs borrowed liberally from van Agtmael's recounting of how the term "emerging markets" was coined.
[14] Federal Reserve, "Flows of Funds Report 1974–1985," http://www.federalreserve.gov/releases/z1/ (accessed April 23, 2009).
[15] International Monetary Fund, "World Economic Outlook," (April 2009). http://www.imf.org/external/pubs/ft/weo/2008/01/weodata/index.aspx (accessed April 21, 2009). Data are based on the "Emerging and developing economies" category as defined by the IMF.
[16] See note 4; Thomson Datastream.
[17] See note 10; Data are based on the "Emerging and developing economies" category as defined by the IMF.
[18] See note 4; Thomson Datastream.
[19] See note 4.
[20] See note 4; Thomson Datastream.
[21] The World Bank Group, The East Asian Miracle: Economic Growth and Public Policy (Oxford University Press, 1993). Not all of the countries listed by the World Bank are formally considered emerging markets by MSCI today. For instance, Hong Kong and Singapore are classified as developed markets.
[22] The World Bank Group, "World Development Indicators," http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:20398986~menuPK:64133163~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html (accessed April 21, 2009).
[23] Emerging Asia equities are defined as those countries in the MSCI Emerging Asia Index as of 12/31/07.
[24] Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing, or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability, and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits), or any other damages.
[25] See note 1.
[26] International Monetary Fund, "World Economic Outlook," (April 2009); See note 4; Inflation rates from the IMF were averaged across emerging market countries as defined by MSCI for the time period 1984–1995.
[27] See note 1.
[28] Paul Krugman, "The Myth of Asia's Miracle," Foreign Affairs 73 (Nov/Dec 1994), 62.
[29] Bloomberg Financial, L.P., as of August 31, 2009.
[30] Federal Reserve Bank of San Francisco, "What Caused East Asia's Financial Crisis?" (August 7, 1998), 98–24.
[31] Public Broadcasting Service, "Timeline of the Panic," http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/cron.html (accessed April 21, 2009).
[32] Ibid.
[33] See note 4; Thomson Datastream.
[34] See note 4.
[35] For a thorough analysis of these phenomenon, see Charles P. Kindleberger's classic Manias, Panics, and Crashes: A History of Financial Crisis, now in its fifth edition.
[36] Robert Shiller, Irrational Exuberance (Broadway Business 2nd Edition, 2006), 85.
[37] "Market Crashes: The South Sea Bubble," Investopedia, http://www.investopedia.com/features/crashes/crashes3.asp (accessed April 21, 2009).
[38] Sonthya Vanichavatana, "Thailand Real Estate Market Cycles: Case Study of 1997 Economic Crisis," General Housing Bank 1, Issue 1 (June–December 2007).
[39] Sebastian Edwards and Jeffrey Frankel, Preventing Currency Crisis in Emerging Markets (University of Chicago Press, 2002).
[40] Ibid.
[41] Don Kirk, "G.M. to Offer Formal Plan for Takeover of Daewoo," New York Times (May 30, 2001), http://query.nytimes.com/gst/fullpage.html?res=990CE0DB123CF933A05756C0A9679C8B63&n=Top%2FReference%2FTimes%20Topics%2FSubjects%2FC%2FCorporations (accessed April 23, 2009).
[42] International Monetary Fund, "The IMF's Response to the Asian Crisis," (January 1999), http://www.imf.org/external/np/exr/facts/asia.htm (accessed April 23, 2009).
[43] Michael Shari, "The IMF Bailout: Up In Smoke," Business Week (May 21, 1998), http://www.businessweek.com/1998/22/b3580019.htm (accessed April 23, 2009).
[44] For an exhaustive account of Mao's rise to power and nearly 30-year reign see Mao: The Unknown Story by Jung Chang and Jon Halliday.
[45] IMF World Economic Outlook Database, October 2008.
[46] James Kynge, China Shakes the World: A Titan's Rise and Troubled Future and the Challenge for America (Mariner Books, 2007).
[47] See note 25.
[48] Thomson Datastream.
[49] Bloomberg Finance L.P., Thomson Datastream.
[50] "Rushing on by Road, Rail and Air," The Economist (February 14, 2008), http://www.economist.com/world/asia/displaystory.cfm?story_id=10697210 (accessed April 23, 2009).
[51] See note 28.
[52] Global Financial Data.
[53] See note 25.
[54] Bloomberg Finance L.P., Fisher Investments research.
[55] Tan Kong Yam, "Holding Out For China Share Reform Benefits," FT Mandate (December 2005), http://www.ftmandate.com/news/fullstory.php/aid/937/Holding_out_for_china_share_reform_benefits.html (accessed April 23, 2009).
[56] Geoff Dyer, "PetroChina Fuelling China's Share Boom," Financial Times (November 5, 2007), http://www.ft.com/cms/s/0/258436ac-8bc3-11dc-af4d-0000779fd2ac.html (accessed April 23, 2009).
[57] "A Record Year for Chinese IPOs," Reuters (January 23, 2008), http://www.reuters.com/article/pressRelease/idUS137538+23-Jan-2008+PRN20080123?bcsi_scan_408DE456E3075246=0tGa+T9qHB6TONP3Hr1uSCEAAADCuM8D (accessed April 23, 2009).
[58] Chi-Chu Tschang, "China's Great Railway Expansion," BusinessWeek (October 23, 2008), http://www.businessweek.com/magazine/content/08_44/b4106067132043.htm (accessed April 23, 2009).
[59] Henry M. Littlefield, "The Wizard of Oz: Parable on Populism," American Quarterly, 16, 1. (1964), 47–58.
[60] Edwin Williamson, The Penguin History of Latin America, (Penguin Books, 1992), 347–348.
[61] "Research Tools: Economics A-Z," The Economist, http://www.economist.com/research/Economics/alphabetic.cfm?letter=G#ginicoefficient (accessed April 24, 2009). Ranking based on the UN's Gini Coefficient.
[62] Milton Friedman and Anna Jacobson Schwartz, A Monetary History of the United States 1867–1960 (Princeton University Press, 1971).
[63] IMF World Economic Outlook Databases, October 2008.
[64] "A Stimulating Question," The Economist (December 11, 2008), http://www.economist.com/finance/displaystory.cfm?story_id=12775548 (accessed April 24, 2009).
[65] Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing, or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability, and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits), or any other damages; Thomson Datastream.
[66] The World Bank Group. Represents external debt of Latin American & Caribbean region.
[67] See note 2.
[68] Energy Information Administration.
[69] Thomson Datastream.
[70] Ibid.
[71] FDIC Division of Research and Statistics," History of the Eighties—Lessons for the Future," FDIC (December 1997), www.fdic.gov/bank/historical/history (accessed May 4, 2009).
[72] Ibid.
[73] Michael P. Dooley, A Retrospective on the Debt Crisis (National Bureau of Economic Research, 1994), 264.
[74] Charles P. Kindleberger and Robert Z. Aliber, Manias, Panics, and Crashes (John Wiley & Sons, 2005), 4.
[75] See note 13.
[76] Ibid.
[77] Global Financial Data.
[78] Ibid.
[79] See note 13.
[80] Manuel Monteagudo, The Debt Problem: The Baker Plan and the Brady Initiative, in La Dette Extérieure: The External Debt (Martinus Nijhoff Publishers, 1995), 141.
[81] Ian Vázquez, "The Brady Plan and Market-Based Solutions to Debt Crisis," The Cato Journal 16, 2.
[82] Ibid.
[83] IMF World Economic Outlook Database, October 2008.
[84] Garciela L. Kaminsky and Alfredo Pereira, "The Debt Crisis: Lessons of the 1980s for the 1990s," Journal of Development Economics 50, 1 (1996).
[85] World Bank Group.
[86] See note 2.
[87] Scott Gavin and Anastasia Toufexis, "Brazil Victory for the 'Great Conciliator'," Time (January 28, 1985), http://www.time.com/time/magazine/article/0,9171,959258,00.html (accessed April 28, 2009).
[88] See note 2.
[89] Ibid.
[90] Ibid.
[91] See note 25.
[92] Global Financial Data.
[93] Paul Krugman, The Return of Depression Economics (W.W. Norton and Company, 2000), 42.
[94] See note 25.
[95] Huw Pill, Mexico: The Tequila Crisis 1994–95 (Harvard Business School Publishing),
[96] See note 35.
[97] See note 37.
[98] See note 34.
[99] See note 35.
[100] See note 37.
[101] See note 34.
[102] See note 37.
[103] See note 35.
[104] Michael J. Economides and Donna Marie D'Aleo, From Soviet to Putin and Back (Energy Tribune Publishing, 2008), 322.
[105] Ibid.
[106] Ibid.
[107] Ibid.
[108] Ibid.
[109] Ibid.
[110] Ibid.
[111] Ibid.
[112] Ibid.
[113] Ibid.
[114] IMF World Economic Outlook Database, October 2008.
[115] See note 1.
[116] Ibid.
[117] Ibid.
[118] David Hoffman, The Oligarchs: Wealth and Power in the New Russia (Public Affairs, 2003), 362.
[119] See note 1.
[120] Ibid.
[121] Energy Information Administration.
[122] Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages; Thomson Datastream.
[123] See note 15.
[124] Global Financial Data (RTS Index).
[125] John Odling-Smee, The IMF and Russia in the 1990s, IMF Working Paper (August 2004), 21.
[126] Abbigail J. Chiodo and Michael T. Owyang. A Case Study of a Currency Crisis: The Russian Default of 1998, (The Federal Reserve Bank of St. Louis, November/December 2002).
[127] See note 15.
[128] See note 21.
[129] Global Financial Data.
[130] See note 15.
[131] "Russia: Fears of a New Ruble Crisis," Stratfor Global Intelligence (January 7, 2009), http://www.stratfor.com/analysis/20090106_russia_fears_new_ruble_crisis (accessed May 7, 2009).
[132] See note 21.
[133] See note 11.
[134] See note 1.
[135] "Putin Clinches Rusian Presidency," BBC News (March 27, 2000), http://news.bbc.co.uk/2/hi/europe/692001.stm (accessed April 28, 2009).
[136] See note 11.
[137] See note 1.
[138] Ibid.
[139] Ibid.
[140] Andrew Kramer, "Last Piece of Russian Oil Giant is Sold," New York Times (May 12, 2007), http://www.nytimes.com/2007/05/12/business/worldbusiness/12yukos.html?_r=1 (accessed April 28, 2009).
[141] "Sergei Pulls It Off," The Economist (July 20, 2006), http://www.economist.com/finance/displaystory.cfm?story_id=E1_STJRSNV (accessed April 28, 2009).
[142] Eric P. Louw, The Rise, Fall, and Legacy of Apartheid (Greenwood Publishing Group, 2004).
[143] Stephen R. Lewis, The Economics of Apartheid (Council on Foreign Relations, 1990), 14–15.
[144] Ibid.
[145] Chamber of Mines of South Africa.
[146] South African Reserve Bank, Quarterly Bulletin.
[147] Alan Hirsch, Season of Hope (University of KwaZulu-Natal Press, 2005), 2.
[148] Bloomberg Financial L.P.
[149] See note 44.
[150] "South Africa's Jumbos Head North," Economist (December 10, 1998).
[151] "Broad-Based Black Economic Empowerment Strategy & Codes of Good Practice to Broad-Based Black Economic Empowerment," Department of Trade and Industry, http://www.dti.gov.za/ (accessed May 7, 2009).
[152] Rebecca Bream and Alec Russell, "Anglo in Empowerment Deal," Financial Times (September 5, 2007), http://www.ft.com/cms/s/0/39619d58-5b4a-11dc-8c32-0000779fd2ac.html (accessed April 28, 2009).
[153] "The Way to BEE," Economist (December 19, 2006), http://www.economist.com/business/displaystory.cfm?story_id=E1_RQVDTDN (accessed April 28, 2009).
[154] Luke Peterson and Alan Beattie, "Mining Trio Mount Court Challenge to South Africa," Financial Times (March 9, 2007), http://www.ft.com/cms/s/0/d4e0c0a6-cde2-11db-839d-000b5df10621.html (accessed April 28, 2009).
[155] Thomson Datastream; Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing, or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability, and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits), or any other damages.
[156] Ibid.
[157] Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing, or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability, and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits), or any other damages.
[158] Ibid.
[159] Ibid.
[160] See note 1.
[161] See note 3.
[162] Ibid.
[163] Ibid.
[164] See note 1.
[165] Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower, "Determinants of Portfolio Performance II: An Update," Financial Analysts Journal 47 (1991), 40–48.
[166] As measured by MSCI Taiwan, as of 12/31/2008; See note 3.
[167] Thomson Datastream, Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis, and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing, or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability, and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits), or any other damages.
[168] Ibid.
[169] Ibid.
[170] Associated Press, "Raw Data: List of Recent Coups in Thailand's History," Fox News (September 19, 2006), http://www.foxnews.com/story/0,2933,214562,00.html (accessed April 28, 2009).
[171] International Monetary Fund, World Economic Outlook Database, October 2008.
[172] See note 1.
[173] Global Financial Data, Brazil's currency devalued in 1986, 1989, 1990, 1993, and 1994.
[174] Jorn Madslien, "Brazil's Looming Economic Crisis," BBC News (August 5, 2002), http://news.bbc.co.uk/1/hi/business/2173296.stm (accessed April 28, 2009).
[175] "Lula Wins Brazil Pension Reforms," BBC News (December 12, 2003), http://news.bbc.co.uk/2/hi/americas/3312175.stm (accessed April 28, 2009).
[176] Central Bank of Brazil.
[177] See note 1.
[178] "World Crude Steel Production, 1950 to 2006," International Iron and Steel Institute, http://www.worldsteel.org/?action=storypages&id=193 (accessed July 16, 2008); Metal Producing & Processing Staff, "Global Steel Ouput Rose 7.5% in 2007," Metal Producing & Processing (January 24, 2008).
[179] Thomson Datastream; as measured by West Texas Intermediate crude oil.
[180] US Department of the Interior, "Iron Ore Statistics and Information," US Geological Survey (April 2, 2009), http://minerals.usgs.gov/minerals/pubs/commodity/iron_ore/ (accessed April 28, 2009).
[181] See note 1.
[182] International Monetary Fund, World Economic Outlook Database, October 2008; See note 1.
[183] See note 1.
[184] Ibid.
[185] Ibid.
[186] "South Korea in Plan to Attract Capital," New York Times (July 8, 2002), http://www.nytimes.com/2002/07/08/business/south-korea-in-plan-to-attract-capital.html (accessed April 28, 2009).
[187] Nicholas Varchaver, "What Warren Thinks. . .," Fortune Magazine (April 14, 2008), http://money.cnn.com/2008/04/11/news/newsmakers/varchaver_buffett.fortune/index.htm (accessed April 28, 2009).
[188] Jude Webber, "IMF Asks Argentina to Clarify Inflation Figures," Financial Times (February 11, 2008), http://www.ft.com/cms/s/0/292718a6-d8d5-11dc-8b22-0000779fd2ac.html (accessed April 28, 2009).
[189] Bloomberg Finance L.P.
[190] Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used to create any financial instruments or products or any indices. The MSCI information is provided on an "as is" basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the "MSCI Parties") expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages.
[191] Ibid.
[192] Bogle Financial Markets Research Center, "About John C. Bogle," Vanguard (May 2006), http://www.vanguard.com/bogle_site/bogle_bio.html (accessed April 28, 2009).
[193] ProFunds website, www.profunds.com.
[194] Bloomberg Financial, L.P. as of 4/21/09.
[195] Ibid.
[196] Securities and Exchange Board of India, "Securities and Exchange Board of India (Foreign Institutional Investors) Regulations," (November 1995, amended October 30, 2008), http://www.sebi.gov.in/Index.jsp?contentDisp=SubSection&sec_id=5&sub_sec_id=5 (accessed April 28, 2009).
[197] Ibid.
[198] See note 6, as of 4/22/09.
[199] Bloomberg Finance L.P.
[200] Peter Drysdale, Reform and Recovery in East Asia: The Role of the State and Economic Enterprise (Routledge, 2000), 174.
[201] Treasury Malaysia Ministry of Finance, "Statement on the Repatriation of Portfolio Capital," (February 4, 1999), http://www2.treasury.gov.my/index.php?option=com_content&view=article&id=812%3Akenyataan-oleh-yb-menteri-kewangan-i-tun-dato-daim-bin-zainuddin-mengenai-repatriasi-modal-portfolio&catid=53%3Aucapan&Itemid=251&lang=en (accessed April 28, 2009).
[202] See note 2.
[203] Ibid.
[204] Thomson Datastream; See note 2.