A September to Remember, So Far

09/17/2009 11:26 am EST

Focus: GLOBAL

Igor Greenwald

Chief Investment Strategist, MLP Profits

Why did the American chicken cross the road? To get a closer look at a Chinese tire.

On the anniversary of the Lehman Brothers bankruptcy, the latest scare facing stock-market investors sounded more like a joke than a calamity. The notion that the US-Chinese economic partnership would survive the post-Lehman financial meltdown only to dissolve in a spat over tariffs on tires and drumsticks was never likely to be taken seriously for long, even if it did briefly roil Asian markets.

So much for that trade war. By Wednesday, stocks in Hong Kong, Taiwan, South Korea, and Australia had followed Wall Street to fresh bull market highs. Chinese chicken producers and US tire makers pocketed a protectionist boost. And the rest of the world got on with the business of making money.

And what a business that has been thus far in September! Halfway through the month, the MSCI EAFE global developed-market index was up 2.6% in dollar terms, on the coattails of a 3.3% romp by US stocks, as well as Germany’s 4.8% blitz and the 7.6% eruption in Canada.

Toronto has almost matched the BRICs—the Brazil, Russia, India, and China quartet is up 7.8% in the first half of September. Russia leads that parade with a 12.5% gain on a combination of the falling dollar and rising resource prices. Peru’s 10% climb and Brazil’s 8.7% burst are also a product of their mineral riches, in large part. But Taiwan and Thailand are up more than 8% so far this month without the benefit of a similar endowment.

Further out on the wild and wooly frontier, Serbia’s up 18%, Croatia has leaped 11% and Lithuania has surged 10%, ahead of the 8% gusher in the United Arab Emirates and the 5% thirst quencher in Saudi Arabia.

Russia’s windfall certainly won’t make the Poles (down 5% in September) or the Czechs (-2%) happier. But the Czechs at least are still sitting on stellar annualized gains going back five and ten years, so maybe this is simply their timeout.

Among American Depositary Receipts, it’s been a particularly green week for Irish banks, as a bailout via a government-owned “bad bank” to buy up problem assets moved closer to passage. Steel makers Arcelor-Mittal (NYSE: MT), Posco (NYSE: PKX), and Mechel (NYSE: MTL) have also forged double-digit gains in the last week, a run extended by Mittal’s bullish forecast on demand from emerging markets.

Chinese Internet jetsetters Baidu (Nasdaq: BIDU) and Shanda Interactive (Nasdaq: SNDA) partied like it was 1999. ADRs from Brazil also scored at will, paced by the likes of frozen foods giant Brasil Foods (NYSE: PDA), Brasil Telecom (NYSE: BTM), and all the other Brazil telecoms as well, the attractions of strong domestic growth enhanced by the appreciating real and a percolating M&A revival. European telecoms and insurers have rung up impressive gains alongside South African miners and Asian banks, underscoring the breadth of the rally.

Given all this, it was only a matter of time before the Sri Lankans and the Mongols crashed the party—and that time is now, writes Gregory Weldon of Weldon’s Money Monitor. His bullish call on Russia, Brazil, Australia, and commodities proved on the money.

Cabot’s Paul Goodwin, meanwhile, sees great things in store for America Movil (NYSE: AMX), the Mexican wireless play that was one of the standouts of the previous bull market. While the stock has doubled from its March low, it remains quite cheap relative to its growth prospects. With wireless telecoms around the world on the up swing, this ADR could break out of its recent range in a hurry.

And then there are the Canadian income trusts, whose double-digit yields from rising income streams suggest the rally may have more room to run. Canadian Edge guru Roger Conrad writes that investors continue to shy away from these cash cows on fears of an eventual tax hit, a threat he argues has been more than fully discounted.

With so many bogeymen and nightmares falling by the way side, fear has become an increasingly precious market resource of late. There aren’t that many panic deposits left to mine. Continued gains will require more greed, a powerful but accident-prone propellant.

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