Upton says that China must slow down because the government has been spending at a pace that cannot be sustained. He says that countries should spend from 25% to 35% of GDP on infrastructure and other long-term investments, but China has been spending 48%. "A lot of the infrastructure in China is superb now," he said. "They have high-speed trains and airports that are the best in the world. But it gets to the point where you cannot continue to add to that." Brazil's GDP growth rate dropped from 7.5% in 2010 to 0.9% last year. Upton says that the country has been spending only 18% on investments. Poor roads and other outdated infrastructure have created bottlenecks. In addition, prices of commodities fell as demand from China weakened.
Soft commodity prices have taken a toll on Russia, which recorded a GDP rate that fell from 4.3% in 2010 to 3.4% in 2012. Russia has failed to diversify its economy away from dependence on oil exports.
Oey says that Thailand and the Philippines should continue growing smartly because of increasing consumer sales and investments in infrastructure. The IMF estimates that both countries should grow around 6% this year. For the short term, the growth should continue drawing investors to stocks in Thailand and the Philippines, says Oey. That should boost the country ETFs. But she cautions that investors should prepare for a bumpy ride because valuations are no longer cheap. The MSCI Thailand index now has a price-to-earnings ratio of 14.8. Since 2007, the index has posted an average figure of 12.5. The Philippines benchmark has a P/E of 26.1, up from an average figure of 17.3. At the time of publication, Luxenberg had no positions in securities mentioned.. Follow @StanLuxenberg This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.