This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.
In his Global Stock Investor, he explains, "The exchange-traded fund is a bet that the initiatives of policy makers across the globe will be sufficient to trigger a sustained bounce in emerging markets stocks between now and the end of 2009.
"The policy responses to the global economic crisis have been both massive and coordinated. The European Central Bank has entered into foreign currency swaps with Iceland and Switzerland, even though they are outside the eurozone.
"The European Union joined forces with the International Monetary Fund (IMF) and the World Bank to provide loan facilities totaling $25 billion to Hungary.
"Recently, the U.S. Federal Reserve opened swap lines of $30 billion each to Brazil, Mexico, South Korea, and Singapore. All of these efforts combined will ease the shortage of dollars that has ravaged emerging markets.
"As one analyst put it: 'This is the turning point, not just for emerging markets, but for the whole of the credit crisis.' Added another: 'The world is finally starting to sort itself out. It is difficult to correct the imbalances in the markets from one day to the next, but this does look like it establishes a floor.'
"Emerging markets can turn on a dime. Since hitting a four-year low in 2008, the benchmark MSCI emerging equities index rocketed more than 24% in one week in December 2008.
"Emerging market equities are as cheap as they have ever been. The benchmark MSCI Emerging Markets index is trading at a P/E in the single digits, down from 18.5 in 2007. Markets such as Turkey and Russia are trading at a P/E below 5.
"And while global growth has slowed, emerging markets are still expected to grow at an average of 5% in 2009, compared with 1% expected in developed markets. This adds up to considerable upside in global markets."
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