Morgan Stanley's Pelosky on Emerging Market Rally: Comment
New York, May 12 (Bloomberg) - Robert Pelosky, chief
emerging market strategist at Morgan Stanley Dean Witter,
comments on the current rally in emerging market stocks and bonds
and his stock picks. His comments were in a speech to the Council
of the Americas in New York and during an interview afterward.
''I believe we've entered the new investment cycle for
emerging markets that will take us to all-time highs over the
next two to three years. Between January 1999 and 2002, emerging
markets could be up 100 percent in U.S. dollars. We are in the
value stage currently. Growth will take place over the next one
to three years - both GDP and earnings will rise. We expect
emerging markets in general should average 15 to 20 percent
earnings per share growth over the next couple years. Latin
America could recover faster than people think. We think Latin
American economies will grow 0.5 percent this year, and 3 percent
next year. Lastly, the momentum stage will occur when non-
dedicated investors come in to the asset class.''
''Telmex is our poster stock. It is up 80 percent, and it's
still trading at a 25 percent discount to a global
telecommunications average. Telmex has already demonstrated its
ability to compete very strongly. However, the stock is probably
due for a period of consolidation, maybe a pause. We still have a
''buy'' recommendation on it, but we started recommending it at
56. Now it's at 88.
''We like stocks like Unibanco and Brahma in Brazil, Cemex
in Mexico, Pohang Iron & Steel Co. in Korea, TSMC in Taiwan,
several stocks in India, particularly some of the big
multinational corporations. In Eastern Europe, we like Hungary.''
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