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August 9, 2013, 5:09 P.M. ET

The Emerging Market Power Rankings:

Emerging Markets Fall, CommodityProducers Gain

The iShares MSCI Emerging Markets Index ETF (EEM) fell 0.9% this week, but truly it was

a week of two halves. During the first half of the week, the MSCI Emerging Markets Index soldoffand harddropping 2.9% through Wednesday. The reason: China reported a very solid

services PMI. Why is that bad news? My guess is that it signals that its transformation to a

consumer-heavy economy from an export-driven one was on track.

But China then reported its export numbers for July on Thursday and they were out-of-the-parkgood: They rose 5.1%, after falling 3.1% in June. On Thursday and Friday, the iShares MSCI

Emerging Markets Index ETF rose 2.1%.

It also helped that U.S. Treasury yields remained range bound and the dollar weak, despite

comments from U.S. Federal Reserve governors suggesting tapering was looking more likely.And that gave commodities like gold a boost as well. Winner: Commodity producing nations.

Ironically, Asia didnt get a lift. The iShares FTSE China 25 Index (FXI)dipped 1.3%, theiShares MSCI Taiwan ETF (EWT) fell 3.7% and the iShares MSCI Philippines Investable

Market Index ETF (EPHE) dropped 3.2%.

But were here to talk about the winners. Here they are.

#1 The iShares MSCI All Peru Capped Index ETF (EPU): +5.1%

Finally, Peru caught a break. The beaten-down commodity-producer has done everything in its

power to arrest the slide in its currencyitsbought its sol in the foreign exchange markets and

kept its rates on holdand finally it worked. Even after this weeks big gain, the iShares MSCIAll Peru Capped Index ETF has dropped 26% this year.

#2 The iShares MSCI Poland Investable Market ETF (EPOL): +2.3%

Poland didnt say anything this week that would send its shares higher. But its economy is

closely linked to developed Europe, and investors are betting Europe is finally recovering.Hence, Poland gains. The iShares MSCI Poland Investable Market ETF has dropped 4.1%

this year.

#3 The iShares MSCI Brazil Capped Index ETF (EWZ): +1.5%

http://quotes.barrons.com/eemhttp://in.reuters.com/article/2013/08/03/china-economy-pmi-idINDEE97202220130803http://in.reuters.com/article/2013/08/03/china-economy-pmi-idINDEE97202220130803http://online.wsj.com/article/SB10001424127887324522504579000152241442452.html?mod=WSJ_hpp_LEFTTopStorieshttp://quotes.barrons.com/FXIhttp://quotes.barrons.com/ewthttp://quotes.barrons.com/EPHEhttp://quotes.barrons.com/EPUhttp://www.reuters.com/article/2013/08/09/markets-peru-sol-idUSL1N0GA19K20130809http://www.reuters.com/article/2013/08/09/markets-peru-sol-idUSL1N0GA19K20130809http://www.reuters.com/article/2013/08/09/markets-peru-sol-idUSL1N0GA19K20130809http://www.reuters.com/article/2013/08/09/peru-economy-rate-idUSL1N0G92DB20130809http://quotes.barrons.com/epolhttp://www.bloomberg.com/news/2013-08-08/export-rebound-from-china-to-germany-signals-recovery.htmlhttp://www.bloomberg.com/news/2013-08-08/export-rebound-from-china-to-germany-signals-recovery.htmlhttp://quotes.barrons.com/EWZhttp://quotes.barrons.com/eemhttp://in.reuters.com/article/2013/08/03/china-economy-pmi-idINDEE97202220130803http://in.reuters.com/article/2013/08/03/china-economy-pmi-idINDEE97202220130803http://online.wsj.com/article/SB10001424127887324522504579000152241442452.html?mod=WSJ_hpp_LEFTTopStorieshttp://quotes.barrons.com/FXIhttp://quotes.barrons.com/ewthttp://quotes.barrons.com/EPHEhttp://quotes.barrons.com/EPUhttp://www.reuters.com/article/2013/08/09/markets-peru-sol-idUSL1N0GA19K20130809http://www.reuters.com/article/2013/08/09/peru-economy-rate-idUSL1N0G92DB20130809http://quotes.barrons.com/epolhttp://www.bloomberg.com/news/2013-08-08/export-rebound-from-china-to-germany-signals-recovery.htmlhttp://quotes.barrons.com/EWZ

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Ah, Brazil. Inflation has slowed, and some are speculating that its central bank mightstop hiking

interest rates. But really, this is all about China. And ifVale (VALE) can gain because itsees

stronger demand for iron ore from China, why not Brazil as a whole? The iShares MSCI BrazilCapped Index ETF has dropped 20% this year.

#4 The iShares MSCI Mexico Capped Investable Market ETF (EWW): +1.3%

As Poland is to Europe, Mexico is to the U.S. And with the economic data out of the U.S.

looking goodjobless claims on Thursday were the lowest in six yearsMexico has gotten aboost. Nor does it hurt that Mexicos inflation rate fell this week, and that momentum is gaining

to end the governments monopoly over the oil sector. The iShares MSCI Mexico CappedInvestable Market ETF has dropped 0.7% in 2013.

#5 The iShares MSCI South Africa Index ETF (EZA): +1.1%

South Africa said this week that its manufacturing production slowed in June, butgold rose.

Guess which one investors cared about? The iShares MSCI South Africa Index ETF hasdropped 14% this year.

August 12, 2013, 3:16 A.M. ET

Emerging Markets Morning Roundup:

China Rallies On Cheap Valuation; EM

Losing SteamBy Shuli Ren

Good morning from Hong Kong!

Today is my first day on Barrons Emerging Markets Daily, taking overBen Levisohn whos

done a fantastic job. Ben is moving over to Barrons Stocks to Watch blog.

A quick self-intro: I spent the last two years writing about corporate strategies and Asian markets

for a Dow Jones investment management product called Dow Jones Banking Intelligence. Inmy previous life back in the US, I worked on quantitative equity strategies forLehmanBrothers, and laterBarclays Capital, in New York. I also taught university-levelmacroeconomics and finance courses at the University of Chicago and Lake Forest College.

People say, those who cant teach write. So here I am.

I welcome your comments and feedback.

http://blogs.wsj.com/economics/2013/08/07/brazil-inflation-data-deepen-dispute-over-direction-of-prices/?KEYWORDS=brazilhttp://http://blogs.wsj.com/economics/2013/08/07/brazil-inflation-data-deepen-dispute-over-direction-of-prices/?KEYWORDS=brazilhttp://http://blogs.wsj.com/economics/2013/08/05/break-in-inflation-could-bring-early-end-to-brazil-tightening-cycle/?KEYWORDS=brazilhttp://blogs.wsj.com/economics/2013/08/05/break-in-inflation-could-bring-early-end-to-brazil-tightening-cycle/?KEYWORDS=brazilhttp://blogs.wsj.com/economics/2013/08/05/break-in-inflation-could-bring-early-end-to-brazil-tightening-cycle/?KEYWORDS=brazilhttp://quotes.barrons.com/VALEhttp://blogs.barrons.com/emergingmarketsdaily/2013/08/09/vale-keeps-climbing-as-nomura-sees-miner-earning-significant-cash/http://blogs.barrons.com/emergingmarketsdaily/2013/08/09/vale-keeps-climbing-as-nomura-sees-miner-earning-significant-cash/http://blogs.barrons.com/emergingmarketsdaily/2013/08/09/vale-keeps-climbing-as-nomura-sees-miner-earning-significant-cash/http://quotes.barrons.com/EWWhttp://www.ajc.com/news/news/national/us-jobless-claims-at-6-year-low-but-hiring-lags/nZJfQ/http://www.reuters.com/article/2013/08/08/mexico-economy-idUSL4N0G93YQ20130808http://www.bloomberg.com/news/2013-08-06/pena-nieto-said-to-seek-amendment-to-share-mexico-oil-production.htmlhttp://www.bloomberg.com/news/2013-08-06/pena-nieto-said-to-seek-amendment-to-share-mexico-oil-production.htmlhttp://www.bloomberg.com/news/2013-08-06/pena-nieto-said-to-seek-amendment-to-share-mexico-oil-production.htmlhttp://quotes.barrons.com/EZAhttp://www.bloomberg.com/news/2013-08-08/south-africa-manufacturing-growth-slows-to-0-4-in-july.htmlhttp://www.reuters.com/article/2013/08/09/markets-precious-idUSL4N0GA23V20130809http://www.reuters.com/article/2013/08/09/markets-precious-idUSL4N0GA23V20130809http://blogs.wsj.com/economics/2013/08/07/brazil-inflation-data-deepen-dispute-over-direction-of-prices/?KEYWORDS=brazilhttp://http://blogs.wsj.com/economics/2013/08/05/break-in-inflation-could-bring-early-end-to-brazil-tightening-cycle/?KEYWORDS=brazilhttp://blogs.wsj.com/economics/2013/08/05/break-in-inflation-could-bring-early-end-to-brazil-tightening-cycle/?KEYWORDS=brazilhttp://quotes.barrons.com/VALEhttp://blogs.barrons.com/emergingmarketsdaily/2013/08/09/vale-keeps-climbing-as-nomura-sees-miner-earning-significant-cash/http://blogs.barrons.com/emergingmarketsdaily/2013/08/09/vale-keeps-climbing-as-nomura-sees-miner-earning-significant-cash/http://quotes.barrons.com/EWWhttp://www.ajc.com/news/news/national/us-jobless-claims-at-6-year-low-but-hiring-lags/nZJfQ/http://www.reuters.com/article/2013/08/08/mexico-economy-idUSL4N0G93YQ20130808http://www.bloomberg.com/news/2013-08-06/pena-nieto-said-to-seek-amendment-to-share-mexico-oil-production.htmlhttp://www.bloomberg.com/news/2013-08-06/pena-nieto-said-to-seek-amendment-to-share-mexico-oil-production.htmlhttp://quotes.barrons.com/EZAhttp://www.bloomberg.com/news/2013-08-08/south-africa-manufacturing-growth-slows-to-0-4-in-july.htmlhttp://www.reuters.com/article/2013/08/09/markets-precious-idUSL4N0GA23V20130809

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China rallied today. One explanation: Beijing is quietly boosting financial stimulus to local

governments. Another: Chinese stocks are cheap.Shanghai Stock Exchange Composite Index

gained 1.5% mid-day and Hong Kong Hang Seng Index rallied 1.8%.

For the first time since 2007, developed world contributes more to global GDP growth than

emerging markets. The shift may reshape world capital flows out of Emerging Markets intoDeveloped World.

Physical demand for gold remains strong in India. Now that RBI restricts gold imports, Indianjewelers are paying handsome premiumahead of the Hindu festivals.

Emerging Market Stocks in the News

Indias largest drug producerSun Pharmaceutical (SUNPHARMA.NS) gained 7.1% today after

posting a 56% increase in profit.

In an interview with Bloomberg, loss-making Chinese solar panel makerLDK Solar (LDK)said it expects to return to profit this year.

Chinese sportswear company Li Ning (LNNGY) lost 6.9% today, afterswinging to a first-half

loss.

Emerging Markets Daily

August 12, 2013, 5:04 A.M. ET

Tata Motors Upgraded To Buy, 17% UpsidePotential

By Shuli Ren

The luxury car industry in China remains strong for Audi and Mercedes, but Tata Motors

(TTM) Jaguar Land Rover (JLR) sales did not manage to keep up because of petrol engine

supply shortages in China.

Kapil Singh and Nishit Jalan at Nomura Securities expect JLR, the main driver for the stock,to sell better as production constraints in China are getting resolved:

We believe that JLRs performance will improve due to: 1) launch of the new RR Sport; 2)

production constraints in China getting resolved; 3) outlook improving in US and 4) operating

leverage, as 2H is seasonally strong.

http://www.scmp.com/news/china/article/1296056/key-chinese-cities-and-provinces-set-receive-stimulus-quiethttp://www.scmp.com/news/china/article/1296056/key-chinese-cities-and-provinces-set-receive-stimulus-quiethttp://www.bloomberg.com/news/2013-08-12/asia-stocks-fall-as-yen-strengthens-after-japan-gdp-data.htmlhttp://online.wsj.com/article/SB10001424127887324769704579006833569484924.htmlhttp://online.wsj.com/article/SB10001424127887324769704579006833569484924.htmlhttp://online.wsj.com/article/SB10001424127887324769704579006833569484924.htmlhttp://www.bloomberg.com/news/2013-08-11/gold-premiums-in-india-seen-extending-climb-to-record-on-curbs.htmlhttp://www.bloomberg.com/news/2013-08-11/gold-premiums-in-india-seen-extending-climb-to-record-on-curbs.htmlhttp://www.bloomberg.com/news/2013-08-11/gold-premiums-in-india-seen-extending-climb-to-record-on-curbs.htmlhttp://www.bloomberg.com/news/2013-08-09/sun-pharmaceutical-profit-surges-before-pfizer-settlement-charge.htmlhttp://quotes.barrons.com/LDKhttp://www.bloomberg.com/news/2013-08-12/ldk-solar-expects-a-return-to-profit-after-eu-trade-deal.htmlhttp://quotes.barrons.com/LNNGY?mod=DNH_S_cqhttp://online.wsj.com/article/SB10001424127887324769704579007720848730220.htmlhttp://online.wsj.com/article/SB10001424127887324769704579007720848730220.htmlhttp://online.wsj.com/article/SB10001424127887324769704579007720848730220.htmlhttp://blogs.barrons.com/emergingmarketsdaily/http://quotes.barrons.com/TTM?mod=DNH_S_cqhttp://www.scmp.com/news/china/article/1296056/key-chinese-cities-and-provinces-set-receive-stimulus-quiethttp://www.scmp.com/news/china/article/1296056/key-chinese-cities-and-provinces-set-receive-stimulus-quiethttp://www.bloomberg.com/news/2013-08-12/asia-stocks-fall-as-yen-strengthens-after-japan-gdp-data.htmlhttp://online.wsj.com/article/SB10001424127887324769704579006833569484924.htmlhttp://online.wsj.com/article/SB10001424127887324769704579006833569484924.htmlhttp://www.bloomberg.com/news/2013-08-11/gold-premiums-in-india-seen-extending-climb-to-record-on-curbs.htmlhttp://www.bloomberg.com/news/2013-08-11/gold-premiums-in-india-seen-extending-climb-to-record-on-curbs.htmlhttp://www.bloomberg.com/news/2013-08-09/sun-pharmaceutical-profit-surges-before-pfizer-settlement-charge.htmlhttp://www.bloomberg.com/news/2013-08-09/sun-pharmaceutical-profit-surges-before-pfizer-settlement-charge.htmlhttp://quotes.barrons.com/LDKhttp://www.bloomberg.com/news/2013-08-12/ldk-solar-expects-a-return-to-profit-after-eu-trade-deal.htmlhttp://quotes.barrons.com/LNNGY?mod=DNH_S_cqhttp://online.wsj.com/article/SB10001424127887324769704579007720848730220.htmlhttp://online.wsj.com/article/SB10001424127887324769704579007720848730220.htmlhttp://blogs.barrons.com/emergingmarketsdaily/http://quotes.barrons.com/TTM?mod=DNH_S_cq

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We continue to value JLR at an EV/EBITDA multiple of 3x at INR259.1/sh. We value the

domestic business at a multiple of 0.5x EV/sales at INR12.3/share in line with past down cycle

multiples (earlier we valued the company at 7xFY15F EV/EBITDA). We value otherinvestments at INR40/sh. Note that JLR is now trading at a discount to other luxury OEMs in the

sector even though it offers higher EBITDA growth.

Year-to-date, Tata Motors is down 9.7% whereas the S&P BSE Sensex Index is down (only)

2.2%. Tata Motors last trade at INR282. The analysts give a INR327 price target.