Frontier Market and Emerging Market Stock News

The Philippines has been getting into the news more for positive rather than the usual negative reasons, meaning some investors might want to consider investing in the iShares MSCI Philippines Investable Market Index Fund (EPHE) and the Philippine Long Distance Telephone Company (PHI), otherwise known as PLDT. However, I must admit that it is hard for anyone who has ever lived or worked in the Philippines for a considerable period of time to not be a little cynical about the country as it’s usually two steps forward and almost always one step back (and sometimes one step forward and two steps back). But consider the following signs of progress:

Election violence has been on the decline (statistically speaking).
Is it time to invest in the Philippines?
Some high level corruption has or is being tackled.
Some Filipino professionals are returning home as the local economy posts solid growth (6% to 8%) versus the rest of the world.

I should also mention my last article about the Philippines (A ‘Damaged Culture’ No More? An Investing-In-The-Philippines Reality Check) where I suggested investors should read a controversial essay (“A Damaged Culture: A New Philippines?“) written by James Fallows for the Atlantic Monthly just after Marcos was booted out of power. I had also outlined how (for better or for worse) the Philippine economy is a stool propping up oligarchs.

With that said, has the Philippines really made any steps forward to make investing there worth it or is the country back to its old two steps forward and one or more steps back routine?

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Will Emerging Markets and Berjaya Corporation Save RadioShack?

RadioShack Corporation (RSH) is one of the few remaining consumer electronics retailer stocks left in the United States after Circuit City Stores filed for bankruptcy and it has the dubious distinction of being on even shakier ground than Best Buy Co. (BBY), but could emerging markets and a Malaysian conglomerate called Berjaya Corporation be the company’s trump card for survival?

To start with, Berjaya Corporation is RadioShack’s franchise partner in Malaysia and it has aggressive expansion plans to bring the store to the emerging markets of Southeast Asia beginning with Malaysia, where I recently visited, photographed and was completely wowed by one of their new stores. From my visit, it was also clear to me that the RadioShack’s American executives could even learn a few lessons from what Berjaya Corporation in Malaysia is doing to make what is fast becoming yet another failed American brand and concept to actually work for the long-term.

After all and in the United States, RadioShack has attempted to revive itself by selling tablets and smartphones, but these new products have lower profit margins and face stiff competition from online retailers plus the telco carriers themselves. RadioShack also has a ridiculously unprofitable partnership with retail giant Target Corporation (TGT) to sell mobile devices in 1,400 Target stores while the company is rudderless at the top after its CEO resigned in September after only one year on the job.

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A Damaged Culture No More? Investing in the Philippines

The Philippines has the dubious distinction of being called “a damaged culture” or “the sick man of Asia,” but the country is also considered to to be one of the so-called Tiger Cub Economies of Southeast Asia and one of the Next Eleven (N-11) countries. Unfortunately, American investors have few options for investing in the Philippines as the iShares MSCI Philippines Investable Market Index Fund (EPHE) and the Philippine Long Distance Telephone Company (PHI) or PLDT are the only Philippine ETFs or ADRs trading on major US stock changes as other well-known Philippine companies like Ayala Corp (AYALY.PK), Globe Telecom (GTMEF.PK), Jollibee Foods Corp (JBFCF.PK), San Miguel Corp (SMGBY.PK) and SM Investments Corp (SVTMY.PK) are only thinly traded on the OTC.

Manila Bay, The Philippines — Before investing in the Philippines, investors should read James Fallows’ Atlantic Monthly essay: “A Damaged Culture: A New Philippines?”

Nevertheless, the election of Benigno “Noynoy” Aquino III, the son of former President Cory Aquino who replaced dictator Ferdinand Marcos, has fueled optimism that the Philippines has finally turned a corner. But before you consider investing in the Philippines through Philippine ETFs or stocks like the iShares MSCI Philippines Investable Market Index Fund or the Philippine Long Distance Telephone Company, investors might want to consider reading a controversial essay written by James Fallows for the Atlantic Monthly entitled: “A Damaged Culture: A New Philippines?”

Speculators And Hit-And-Runs: Investing in Indonesia

Indonesia is the world’s fourth most populous country, has the world’s largest Muslim population and is considered a good candidate to be added to the so-called list of BRIC countries; but when it comes to investing in Indonesia, American investors would be limited to telco stocks PT Indosat Tbk (IIT) and PT Telekomunikasi Indonesia (TLK) as both trade as ADRs on the NYSE; Indonesia ETFs like the iSHARES MSCI Indonesia Investable Market Index Fund (EIDO), the Market Vectors Indonesia Index ETF (IDX) and the Market Vectors Indonesia Small-Cap ETF (IDXJ); and closed-end fund Aberdeen Indonesia Fund Inc (IF).

Borobodur, Java, Indonesia — Investing in Indonesia, like traveling there, is not without risk.

While that might be a larger than normal selection for American investors compared with other emerging markets, its still fairly limited given Indonesia’s potential economic importance. However, is investing in Indonesia even worth considering and if so, what should you invest in?

Before we look at the options for investing in Indonesia, let me tell you about my recent three week trip to the Indonesian island of Sumatra and the Indonesian city of Medan – which probably has one of the fastest growing economies in the country.