{"id":26151,"date":"2011-12-22T07:00:41","date_gmt":"2011-12-22T12:00:41","guid":{"rendered":"http:\/\/countingpips.com\/fx\/2011\/12\/22\/emerging-markets-will-shine-in-2012\/"},"modified":"2011-12-22T07:00:41","modified_gmt":"2011-12-22T12:00:41","slug":"emerging-markets-will-shine-in-2012","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/12\/22\/emerging-markets-will-shine-in-2012\/","title":{"rendered":"Emerging Markets Will Shine in 2012"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

\"\"<\/a>Perhaps it is my surroundings, but I have emerging markets on my mind this morning.\u00a0 I\u2019m writing this article from, of all places, Paijan, Peru, where I\u2019ll be spending the Christmas and New Year holidays with my inlaws (see map of Paijan<\/a>).<\/p>\n

Paijan is a small farming and ranching town on Peru\u2019s Pacific coast that epitomizes the best and worst of an emerging market country like Peru.\u00a0 You see unlimited opportunities here, non-stop new construction, and a steady stream of migrants from the surrounding hinterlands who are motivated to climb their way up the social ladder.\u00a0 Every man, woman and child is an aspiring entrepreneur, whether they be operating a restaurant out of their home, using a modified dirt bike as a taxi, or selling ice cream to passersby in the Plaza de Armas.\u00a0 Mobile phones\u2014and even BlackBerries and the occasional iPhone\u2014are ubiquitous.\u00a0 And yes, Paijan\u00a0 even has high-speed internet access, provided by a local subsidiary of Spain\u2019s Telefonica (NYSE: $<\/span>TEF<\/a>)<\/strong>. There is an energetic buzz in the air and a sense that progress is possible.<\/p>\n

But lest I paint an unrealistic picture, Paijan is still a third-world farm town.\u00a0 It suffers from poor-quality education, periodic power outages, and the sorts of social divisions that tend to pop up with rapid growth.\u00a0 Violent crime is on the rise, and you don\u2019t want to be on the highways after dark for fear of being ambushed by armed bandits (I\u2019m not joking, by the way).<\/p>\n

And good luck getting to Paijan.\u00a0 Road infrastructure is mediocre at best; the Panamerican Highway is roughly on par with a pre-Interstate 1940s U.S. highway.\u00a0 Flights to the nearest airport in Trujillo are often delayed or even arbitrarily cancelled. \u00a0And getting simple questions answered can be an exercise in frustration.<\/p>\n

Still, the contrast between Paijan\u2014and by proxy Peru and the whole of the emerging market world\u2014and the debt-laden economies of Europe and North America is telling.\u00a0 It\u2019s the difference between people with real hopes of growth and improvement versus people struggling to maintain what they have.\u00a0 It\u2019s optimism vs. pessimism.<\/p>\n

We still have a few trading days left in 2011, but it is safe to say that this wasn\u2019t a good year for emerging market investors.\u00a0 In a year in which the S&P 500 was flat, most emerging markets suffered what I\u2019d consider a bloodletting.\u00a0 Even after bouncing sharply off of their October lows, nearly every emerging market ETF is solidly in the red for 2011. To give examples of a few that I follow:<\/p>\n