Emerging Markets Aren't a Monolith

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The sun is shining brightly at the moment on virtually all the world's emerging-market economies. The MSCI Emerging Markets Index rose nearly 45% in the first nine months of 2007 (the ETF based on this index is the iShares MSCI Emerging Markets Index Fund (EEM - Cramer's Take - Stockpickr)), with the IMF (International Monetary Fund) forecasting economic growth rates of 8% or higher, vs. 2% to 3% for the OECD (Organisation for Economic Co-Operation and Development) nations. It's been difficult lately to find an emerging market anywhere that hasn't outperformed the developed world, with spreads on emerging-market debt now narrowed to historic levels.

Does all this fair weather for developing markets denote a permanent change in their fortunes? Or is it what the famed American malapropist (and baseball player) Yogi Berra might call "déjà vu all over again?" And will emerging-market growth once again implode, as has so often happened in the past?

As participants on a panel titled, "Emerging Markets: Still Emerging?" made clear at the 2007 Wharton Finance Conference, the world's emerging markets can no longer be evaluated en masse. Whereas economists used to draw a single crude line between the "developed" and "less developed" countries, noted moderator Roger Leeds, a Johns Hopkins University international finance professor, they have learned to draw finer distinctions -- between emerging markets on one hand and, on the other, so-called "frontier markets," those with even less liquidity and per capita income.

Latin Speed Bumps

Three of the panel's five participants -- investor Emilio Bassini of Bassini & Co., Jorge Mora, a UBS investment banker, and Jamie Nicholson, head of Latin American corporate credit research for Credit Suisse -- are Latin American specialists, and their collective views on the Latin economies, though not uniformly bearish, sounded dour.