Five Mistakes to Avoid in Emerging Markets Investing

Investing in emerging market equities is fraught with risks.Unlike the developed world developing countries are prone to suffer from a myriad of risks including currency exchange risk, political risk, liquidity risk, transparency risk, etc.

Investors looking to gain exposure to emerging markets should be aware of these risks and take extra precaution before jumping in. Five mistakes that investors can avoid when investing in emerging stocks are listed below:

  1. Failing to take into account political risks.
  2. Selecting wrong country for dividend stocks.
  3. Selecting the wrong sector for investment in a specific country.
  4. Assuming economic growth and higher equity prices are related.
  5. Assuming investments in developed world’s multinationals is enough to profit from the growth in emerging markets.

For example, Brazilian equities have been in doldrums for the past few years under President Dilma Rousseff’s administration and recently she won the election again for a second term. So investors have to brace themselves for a rough ride with Brazilian stocks.

Certain emerging countries are not great for dividend stocks.Countries like India, South Korea can be avoided when hunting for these type of stocks while countries like Chile, Mexico, Taiwan, Malaysia, etc. offer many excellent dividend opportunities.

Ten stocks from emerging markets are listed below with their current dividends for potential investment opportunities:

1.Company: Standard Bank Group Limited (SGBLY)
Current Dividend Yield: 4.16%
Sector: Banking
Country: South Africa

2.Company:Banco Santander- Chile (BSAC)
Current Dividend Yield: 4.96%
Sector: Banking
Country: Chile

3.Company:Empresa Nacional de Electricidad SA (EOC)
Current Dividend Yield: 2.07%
Sector:Electric Utilities
Country: Chile

4.Company:Fomento Economico Mexicano SAB de CV (FMX)
Current Dividend Yield: 3.58%

5.Company: Malayan Banking Berhad (MLYBY)
Current Dividend Yield: 7.06%
Sector: Banking

6.Company: Lukoil (LUKOY)
Current Dividend Yield: 6.51%
Sector: Oil & Gas – Integrated

7.Company: PetroChina Co Ltd (PTR)
Current Dividend Yield: 4.66%
Sector: Oil & Gas – Integrated
Country: China

8.Company:Taiwan Semiconductor Manufacturing Co Ltd (TSM)
Current Dividend Yield: 2.36%
Sector: Semiconductors & Semiconductor Equipment

9.Company:Philippine Long Distance Telephone Co (PHI)
Current Dividend Yield: 4.47%
Sector: Telecom
Country: Philippines

10.Company: Nedbank Group Limited (NDBKY)
Current Dividend Yield: 4.20%
Sector: Banking
Country: South Africa

Note: Dividend yields noted above are as of Jan 9, 2015. Data is known to be accurate from sources used.Please use your own due diligence before making any investment decisions.

Disclosure: Long BSAC

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