INTERMARKET REVIEW
TURKISH INVESTMENT FUND (TKF)
The Turkish Investment Fund (TKF) is a closed-end fund under the advisement
of Morgan Stanley Investment Advisors. Traded on the New York Stock Exchange
(NYSE), the fund is geared toward providing investors with exposure to
equities of companies based in or out of Turkey. Founded in December 1989,
the fund had total net assets in excess of $29 million as of this writing.
Holdings in the Turkish Investment Fund include companies such as Turkiye
Is Bankasi (banking), Akbank (banking), and Turkcell Iletisim Hizmet (communications).
By industry sector, TKF is diversified principally among financials, consumer
discretionary, and industrials.
TKF has been tracing a consolidation pattern between $8 and about $3.75
since spring 2001, after having lost more than half its value in the closing
months of 2000. While there have been minor rallies in the Turkish Investment
Fund late in 2001, late in 2002, and late in 2003, the fund has yet to
enjoy an enduring bull market over the past few years.
What they say: "On the economic front, an unpopular stabilization
programme backed by a $17.5 bn loan from the International Monetary Fund
has begun to yield dividends. Inflation this year is set to fall to a 27-year
low of 20 percent, from 30 percent last year. The government is vowing
to stick to tight fiscal and monetary policies to drive inflation down
to 12 percent next year, and to a single digit thereafter, in line with
the EU's economic criteria for membership." -- Leyla Boulton, "Swathe of
reforms wins international approval," Financial Times, November 17, 2003.
MEXICO FUND (MXF)
The Mexico Fund (MXF) is a closed-end fund under the advisement of Impulsora
del Fondo Mexico, SA de CV. Traded on the NYSE, the fund is geared toward
providing investors with exposure to the equities of companies based in
or out of Mexico. In operation since June 1981, the Mexico Fund had total
net assets of approximately $240 million as of this writing. The fund is
diversified by sector into industries such as communications, food and
beverage, cement, retail, and housing, and includes companies such as TELMEX
and AMX (communications), and WALMEX (retail).
MXF has been rallying strongly in 2003 after losing approximately half
of its value over the course of 2002. Having retraced approximately 50%
of its 2002 decline, the Mexico Fund is -- since early summer 2003 -- above
both its 20- and 50-day moving averages.
What they say: "The blossoming debt market is the result
of Mexico's hard-fought economic stability. In the past few years, inflation
and interest rates have fallen to international levels, allowing investors
to better gauge the future value of money. The country, under President
Vicente Fox, has been criticized for not carrying out economic overhauls
that might help it compete with the likes of China, which overtook Mexico
this year as the No. 2 exporter to the US market. But progress in areas
such as the local lending market highlights the less apparent benefits
of stability, with or without further change." - David Luhnow, "Mexico's
New Lender: Mexico," The Wall Street Journal. November 13, 2003.
TEMPLETON RUSSIA AND EAST EUROPEAN FUND (TRF)
The Templeton Russia and East European Fund (TRF) is a closed-end fund
under the advisement of Templeton Investment Management. Traded on the
New York Stock Exchange, the fund is geared toward providing investors
with exposure to equities of companies based in or out of Russia and East
Europe, including former Soviet bloc nations. Beginning in June 1995, the
Templeton Russia and East European Fund had nearly $119 million in total
net assets as of this writing. Holdings in the fund include Sberbank RF
(banking/finance), Surgutneftegaz (oil and gas), and Yukos (oil). Industry
representation includes sector plays in energy, telecommunications, financials,
and utilities.
TRF has been in a strong bull market since late summer 2002 when prices
for the fund bottomed in the wake of the correction from summer 2001 to
spring 2002 bull market in Russian and East European stocks. Rising above
its 20- and 50-day moving averages in late spring 2003, the fund set a
41/2 year high in mid-October.
What they say: "Mr. Putin may not be too concerned that
his actions raise profound questions about his commitment to the rule of
law, human rights and democracy. But he should remember that the assault
on Mr. Khodorkovsky could undermine something he does hold dear -- Russia's
economic development. Aside from the direct damage to Yukos, Mr. Khodorkovsky's
company, the biggest economic impact of the investigation could be on the
approach of state officials to business in general. Entrepreneurs across
Russia fear bureaucrats could now launch probes of their own against other
companies, big and small." -- "Putin's problem," Financial Times,
November 13, 2003.
INDIA FUND (IFN)
The India Fund (IFN) is a closed-end fund under the advisement of Advantage
Advisors and was founded in February 1994. With over $390 million in total
net assets, the fund is traded on the NYSE and is geared toward providing
investors with exposure to the equities market of India. Top sectors represented
in the fund include energy, finance, consumer nondurables, computer software
and programming, and pharmaceuticals. The fund's largest positions are
in companies such as Reliance Industries (diversified manufacturing), Infosys
Technologies (information technology), and Hindustan Lever (manufacturing/consumer
goods) as of this writing.
IFN has been in a descending consolidation since early in 2001 and has
traded above and below its flattening 20- and 50-day moving averages. At
the same time, prices for IFN have risen dramatically since spring 2003,
doubling from the April lows (when IFN finally broke out above its 20-
and 50-day moving averages) to the October highs.
What they say: "Foreign investors are charmed by India
these days, and no wonder. The government is stable, domestic consumption
is strong and inflation is in check. Since May foreign institutional investors
have pumped $2.6 billion into Indian equities -- more than three times the
inflow in the whole of 2002, according to the Securities and Exchange Board
of India (Sebi), the market regulator. The stockmarket has risen by 51%."
-- "Unwelcome guests: Hedge funds in India," The Economist, October 4, 2003.
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Originally published in the April 2004 issue of Technical Analysis
of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright
2004, Technical Analysis, Inc.
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