NEW YORK (TheStreet) — Morgan Stanley recommends investors reduce some risk in emerging markets stocks, but there are a few ways you can still invest in the region without getting in trouble.

The investment bank’s rationale for the reduction in exposure includes the fact that the MSCI Emerging Market Index(MXEF) reached a new high earlier this week, valuations have expanded and fund inflows have led to an overbought position in emerging markets.

Ron Weiner, president and CEO of RDM Financial Group, would argue that investing in emerging markets is simply investing where the growth is. He argues that emerging markets are still growing anywhere from 6% to 9%, widely outpacing the U.S. and Europe. RDM financial’s investment policy is built upon capitalizing on that emerging market growth.

Morgan Stanley says an easing cycle in Asian emerging markets has been priced in. China helped support this theory over the past weekend by instituting another reduction in the reserve requirement ratio for banks in the region to 20.5% from 21% previously. This was a bit of a surprise, especially as the country reported an increase in inflation just a few weeks earlier.

And yesterday, an indicator of China’s industrial production was released — the HSBC flash purchasing managers index increased to 49.7 in February from 48.8 in January, but still remained below 50 for the eighth consecutive month. A PMI reading below 50 means the sector is contracting. Expansion would be determined by a reading above 50.

The global recession has led to moderate growth in emerging markets, but internal policy is expected to be geared toward maintaining growth as best as countries can.

Weiner points out a few ways to invest in emerging markets safely. First he recommends investing in American companies that serve the emerging markets. Examples he gives include Caterpillar(CAT), Cummins(CMI), McDonald’s(MCD) and Apple(AAPL).

Second, he recommends investing in emerging market dividend funds. While the rules for issuing dividends differs overseas, the dividends can help to mitigate the volatility that is typically associated with investments in emerging market stocks.

The third conservative investing option is buying ETFs comprising companies that serve the emerging markets. His recommendation is the Market Vectors Agribusiness ETF(MOO). The ETF invests in agricultural businesses and ties in well with the fact that 40% of discretionary spending in emerging markets is spent on food. As the population grows, this ETF should benefit.

Article source: http://www.thestreet.com/story/11428502/1/5-stocks-to-safely-make-money-in-emerging-markets.html?cm_ven=RSSFeed

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Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you expect the American homebuilding industry to take off eventually, then the Dow Jones U.S. Home Construction Index Fund ETF (NYSE: ITB  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The construction ETF’s expense ratio — its annual fee — is a relatively low 0.47%.

This ETF doesn’t sport the most attractive performance record, but that’s not surprising, given the state of the U.S. housing market during the relatively short life of the fund. It underperformed the SP 500, on average, over the past three and five years. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

With a low turnover rate of 22%, this fund isn’t frantically and frequently rejiggering its holdings, as many funds do.

What’s in it?
Several home-construction-related companies had strong performances over the past year. Paint giant Sherwin-Williams (NYSE: SHW  ) , for example, gained 19% as it fought rising raw materials costs and offset them by raising its prices. Home builder Pulte Homes (NYSE: PHM  ) , up 14%, has been impressive lately, reporting revenue up slightly over year-ago levels and orders up 8%. Profit margins have also been rising because of effective cost-cutting, as the company sold some less lucrative land lots. Pulte is aiming to pay down debt, too.

Like other companies in this arena, Lowe’s (NYSE: LOW  ) is waiting for the housing market to turn around. But in the meantime, it’s still been able to do well serving the needs of remodelers and repairers, and buying back stock to reward shareholders.

Other companies didn’t do as well last year, but could see their fortunes change in the coming years. Gypsum and wallboard concern USG  (NYSE: USG  ) , for instance, shed about 26% over the past year — though it’s been on the rise in recent months, partly due to promising news from some homebuilders such as Pulte. Having emerged from bankruptcy protection a while back, it may still end up making its investors good money. 

The big picture
Demand for new homes in the U.S. will eventually pick up, once the oversupply that built up in recent years is worked through. A well-chosen ETF can grant you instant diversification across any industry or group of companies — and make investing in and profiting from it that much easier.

Learn about the 5 ETFs That Could Soar in 2012. And if you’re looking for some great investments beyond ETFs, consider these 12 Dividend Stocks for 2012.

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Article source: http://www.fool.com/investing/general/2012/02/22/make-money-in-us-home-construction-the-easy-way.aspx

SAO PAULO (AP) — It wasn’t a tough choice for convicted bank robber Chiquinho: spend the day in a cell or make money out in the sun helping Brazil build a 2014 World Cup stadium.

Former slave worker Nivaldo Inacio da Silva had another easy decision to make: pick cotton for about $2 a day or make eight times as much as a bricklayer at another World Cup venue.

The two are relishing their role in helping tournament preparations that have otherwise invoked widespread criticism over allegations of overspending and misuse of public funds.

Silva and Chiquinho, who full name is Francisco das Chagas Queiroz, are some of those already being positively affected by the World Cup, getting the opportunity of a lifetime because Brazil will host football’s showcase event.

They are part of programs which help those with few opportunities in the job market and take advantage of the World Cup to give them a better chance.

“This is the best thing that has ever happened to me,” the 52-year-old Chiquinho told The Associated Press in a telephone interview. “This type of work gives us dignity, it gives us something to look forward to in the future. If we do a good job here, maybe the company will want to stay with us after we are set free.”

Chiquinho has been in prison since the 1980s after being convicted of bank robbery in the state of Minas Gerais. He will be eligible for parole later this year, in part because his sentence has been gradually reduced thanks to his work helping renovate the Mineirao stadium in Belo Horizonte.

Chiquinho works as a cleaning supervisor at the Mineirao, where two dozen other prisoners are getting the same opportunity to get out of prison and work. In addition to placing them into the work force, the program by Brazil’s National Council of Justice also offers training courses to further facilitate their access to the job market after they leave prison.

It has already helped more than 2,200 prisoners across the country, and currently 59 are working in some of the 12 World Cup stadiums.

Chiquinho and the other prisoners wake up at 4 a.m. every weekday to make a two-hour trip from their penitentiary to Mineirao, working until late in the day before returning. But there is no complaining.

“Our life is getting better because of this chance,” said Chiquinho, who also used to work inside his prison and currently is even allowed to go to college. “I’ll be able to say that I was part of this World Cup, I’ll be proud to say that I was part of it. This will be part of history.”

About 1,000 miles away in the western city of Cuiaba, former slave worker Silva is also appreciating the chance he’s gotten largely thanks to the World Cup.

He was lured into working at a cotton farm under conditions the Brazilian government describe as slave labor. Many times he had to sleep in the fields, didn’t have access to a bathroom or clean water and was given food only sporadically. Silva said he had to pick cotton and clean fields for two days to get a payment.

But when Silva and about a dozen other colleagues were rescued from the farm — after one of them escaped and alerted authorities — they were immediately enrolled in a program created by the labor ministry of Mato Grosso state that trained and prepared such workers to find decent jobs in the region.

Silva got a chance to help build the Arena Pantanal, which will host four World Cup matches.

“We talked to the consortium of companies building the stadium and convinced them that they could be using these workers after they were properly trained,” said Valdiney Arruda, who is in charge of the labor ministry program. “They knew it was a good opportunity and opened up spots for them. These workers studied and now they have good housing and eat properly thanks to this.”

Silva is one of 25 former labor slaves now working at the Arena Pantanal. He started as an assistant bricklayer, making more money than he had ever made in life, and is already getting trained to find a better-paying position in the near future.

“My life is completely different now,” the 44-year-old Silva told the AP. “A lot has changed. Now I’m making some good money, I’m really happy. I’m helping build one of these stadiums and hopefully one day I’ll be able to show it to my children.”

The companies using the former slaves said it was an easy decision to accept these workers, because the civil construction sector is struggling to attract labor.

“Because of this program, they will be able to continue working in civil construction in the future,” said Simone Ponce, a spokeswoman for the Santa Barbara and Mendes Junior consortium. “The social legacy will be tremendous.”

___

Follow Tales Azzoni at http://twitter.com/tazzoni

Article source: http://news.yahoo.com/labor-slaves-prisoners-helping-build-wcup-venues-035930194--soccer.html

SAO PAULO (AP) — It wasn’t a tough choice for convicted bank robber Chiquinho: spend the day in a cell or make money out in the sun helping Brazil build a 2014 World Cup stadium.

Former slave worker Nivaldo Inacio da Silva had another easy decision to make: pick cotton for about $2 a day or make eight times as much as a bricklayer at another World Cup venue.

The two are relishing their role in helping tournament preparations that have otherwise invoked widespread criticism over allegations of overspending and misuse of public funds.

Silva and Chiquinho, who full name is Francisco das Chagas Queiroz, are some of those already being positively affected by the World Cup, getting the opportunity of a lifetime because Brazil will host football’s showcase event.

They are part of programs which help those with few opportunities in the job market and take advantage of the World Cup to give them a better chance.

“This is the best thing that has ever happened to me,” the 52-year-old Chiquinho told The Associated Press in a telephone interview. “This type of work gives us dignity, it gives us something to look forward to in the future. If we do a good job here, maybe the company will want to stay with us after we are set free.”

Chiquinho has been in prison since the 1980s after being convicted of bank robbery in the state of Minas Gerais. He will be eligible for parole later this year, in part because his sentence has been gradually reduced thanks to his work helping renovate the Mineirao stadium in Belo Horizonte.

Chiquinho works as a cleaning supervisor at the Mineirao, where two dozen other prisoners are getting the same opportunity to get out of prison and work. In addition to placing them into the work force, the program by Brazil’s National Council of Justice also offers training courses to further facilitate their access to the job market after they leave prison.

It has already helped more than 2,200 prisoners across the country, and currently 59 are working in some of the 12 World Cup stadiums.

Chiquinho and the other prisoners wake up at 4 a.m. every weekday to make a two-hour trip from their penitentiary to Mineirao, working until late in the day before returning. But there is no complaining.

“Our life is getting better because of this chance,” said Chiquinho, who also used to work inside his prison and currently is even allowed to go to college. “I’ll be able to say that I was part of this World Cup, I’ll be proud to say that I was part of it. This will be part of history.”

About 1,000 miles away in the western city of Cuiaba, former slave worker Silva is also appreciating the chance he’s gotten largely thanks to the World Cup.

He was lured into working at a cotton farm under conditions the Brazilian government describe as slave labor. Many times he had to sleep in the fields, didn’t have access to a bathroom or clean water and was given food only sporadically. Silva said he had to pick cotton and clean fields for two days to get a payment.

But when Silva and about a dozen other colleagues were rescued from the farm — after one of them escaped and alerted authorities — they were immediately enrolled in a program created by the labor ministry of Mato Grosso state that trained and prepared such workers to find decent jobs in the region.

Silva got a chance to help build the Arena Pantanal, which will host four World Cup matches.

“We talked to the consortium of companies building the stadium and convinced them that they could be using these workers after they were properly trained,” said Valdiney Arruda, who is in charge of the labor ministry program. “They knew it was a good opportunity and opened up spots for them. These workers studied and now they have good housing and eat properly thanks to this.”

Silva is one of 25 former labor slaves now working at the Arena Pantanal. He started as an assistant bricklayer, making more money than he had ever made in life, and is already getting trained to find a better-paying position in the near future.

“My life is completely different now,” the 44-year-old Silva told the AP. “A lot has changed. Now I’m making some good money, I’m really happy. I’m helping build one of these stadiums and hopefully one day I’ll be able to show it to my children.”

The companies using the former slaves said it was an easy decision to accept these workers, because the civil construction sector is struggling to attract labor.

“Because of this program, they will be able to continue working in civil construction in the future,” said Simone Ponce, a spokeswoman for the Santa Barbara and Mendes Junior consortium. “The social legacy will be tremendous.”

___

Follow Tales Azzoni at http://twitter.com/tazzoni

Article source: http://news.yahoo.com/former-labor-slaves-prisoners-build-wcup-venues-141727986.html

Securities regulators are so busy trying to solve the last financial crisis that they’re not really confronting the next one.

That’s at least the case in money-market funds, where the U.S. Securities Exchange Commission is about to propose “reforms” designed to solve some of the problems faced during the financial crisis of 2008.

By looking into the rear-view mirror, regulators are likely to bump into a new set of dangers that they don’t have their eyes on.

The good news is that even when the SEC makes its proposal, it is so scared of having its rules reversed that it will wind up delaying the issue in studies, most likely before failing to get the support needed from the agency’s commissioners to pass the rules anyway.

That doesn’t make it a waste of time to see what’s being proposed and why it’s not necessary to protect money-fund shareholders.

The SEC is preparing a plan that would minimize losses in the event of another financial panic like the last one. In 2008, the collapse of Lehman Brothers forced the Reserve Primary fund to “break the buck,” meaning its share price dropped below the customary $1 static price that money funds maintain.

Money-market funds are supposed to be the safest form of mutual investment, using short-term debt securities to generate yield. They typically are used as a parking place, where investors hold cash between pursuing long-term opportunities. Unlike money-market accounts at banks, money funds are not insured deposits.

That said, investors tend to think of money funds like bank accounts in terms of access and convenience. If it appears that their ready cash is not going to be ready for withdrawal at the moment they want it, they’re cashing out. A run on a money fund – like what happened to Reserve Primary – can have massive economic repercussions.

But in dollar terms, there’s a lot of fury over a little money.

At its worst, Reserve Primary wound up worth 97 cents per share, and investors who were stuck with it through the crisis were cashed out at 99 cents on the dollar. But at the time of its failure, the retail version of the Reserve fund was yielding just over 3 percent, meaning that investors stuck with the fund as it endured the crisis actually showed a profit over the course of 2008.

Further, there were other fund firms holding troubled securities at that time. Most simply bought that paper back from the funds to protect their reputation. It’s a form of industry self-insurance; no brand-name investment shop will let its money funds break the buck unless, like Reserve, it is unable to cover the losses.

But this isn’t 2008. The SEC in January 2010 changed rules, requiring money funds to reduce risk by shortening the maturity of the securities in their portfolio while increasing their standards for credit quality, liquidity and transparency.

Last summer, when ratings agencies downgraded U.S. government securities, you didn’t see a debilitating run on money funds; there have been times when the continuing European debt issues have sent big chunks of assets to the exits without inciting a panic.

Perhaps the biggest show of strength is that there’s $2.7 billion in money funds, despite yields so low that many small firms have shuttered funds rather than waiving expenses to avoid running them at a loss.

The iMoneyNet Money Fund Average 7-Day Simple Yield for all taxable money funds is up this week to 0.03 percent, having stood at 0.02 percent for six consecutive months; tax-free and municipal money-market funds are yielding an average of 0.01 percent.

If savers aren’t making anything in money funds (and they’re not), the “guarding against loss” mission would seem to be paramount. There’s no guarantee the proposed changes get the job done.

The agency is apparently ready to propose that funds set aside some capital in reserve, and stop investors from pulling all of their money at once; effectively, savers would be allowed to pull 95 percent of their cash, and would have to wait 30 days to get the rest.

The SEC could favor “floating” net asset values; suffice it to say that those values are always “floating” but are engineered to stay at $1. No one complains when values float up, generating extra yield, but a floating-rate solution simply makes it easier for fund firms to pass money-fund losses to shareholders.

Savers shouldn’t care that the proposals would make some firms drop out of the business, or that the firms that stick it out would face increased costs and administrative challenges.

They should worry, instead, that they’ll be footing the bill to stop a run created by institutions that should know better. Recovery rates for high-quality short-term bonds are well above 99 percent, so holding a fund hurt by bad paper is not a real crisis; big institutions, however, are so afraid of the shadow of a crisis that they’ll take a hit today to get away from the hint of a future loss.

Money-fund yields will be low for years to come; even when rates rise, fund firms will capture most of the initial increase for themselves. Adding additional costs will make that situation worse; damaging the money-market industry will only hurt the capital markets.

Underlying this regulatory effort is the hope that the government won’t have to intervene on some future crisis, a foolhardy effort because Washington would have no choice if the next crisis is big enough.

“Washington is fooling itself in saying ‘We’re never going to do step in again,’ ” said Peter Crane of Crane Data, which tracks the money-fund industry. “What the financial crisis proved is that the Treasury ultimately just has to give its word … and that should end a crisis in confidence. … Nothing the SEC does is going to change that as the ultimate backstop in any money-market crisis situation.”

Truthfully, this appears to be a half-hearted effort by the SEC.

It won’t push through these regulations without studying the potential costs to the industry – something it worries about a lot these days – and the plans won’t pass that muster. Further, it will be hard to get three of the five SEC commissioners to sign off on a plan that is despised by the industry and consumers alike.

No amount of regulation will stop the next crisis. Changes have already been made to anticipate foreseeable dangers. That’s as it should be; meanwhile, investors should be reminded that there’s always the potential for loss in the markets, even in the safest of securities.

Chuck Jaffe is senior columnist for MarketWatch. He can be reached at cjaffe@marketwatch.com or at Box 70, Cohasset, MA 02025-0070.

Article source: http://www.thenewstribune.com/2012/02/22/2036222/money-fund-reforms-wont-stop-the.html