Best Country Investments For The Remainder Of 2010

There are several metrics that investors use to determine which countries' stock markets hold the most promise. Of course, local and regional politics play a significant and often determining role in the fate of a nation's bourse, though these factors are not so easy for most of us to quantify. (Before investing oversees, analyze the risk associated with the region. Read Evaluating Country Risk For International Investing.)

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Below, we focus on two discrete data inputs in examining global market prospects for 2010: recent momentum and credit default risk, as expressed in CDS (credit default swap) prices.

First on our list of market potentials is Russia, with bourse that rose over 130% in 2009, as measured by the Market Vector Russia ETF Trust (NYSE:RSX), and over 17% in just the last quarter. The Russian market played an extraordinary role in calming investors' fears regarding that country's sovereign debt, as well. Should commodities continue to outperform, the Russian market should also continue to be a top performer for the rest of 2010.

Argentina on the Rise
Argentina also looks like a prime location for investment funds in the coming year. Though there is no formal Argentina ETF available, the broad market in that country was up over 100% last year, and can be accessed through several ADRs. Telecom Argentina S.A. (NYSE:TEO) was up approximately 110% last year and nearly 4% in the latest three months, and trades with a P/E ratio of 13. YPF SA (NYSE:YPF) is a giant oil and gas concern that pays a dividend of better than 7.3%. And Pampa Energia S.A. is one of Argentina's largest electric utilities. Another South American country to keep on the radar is Peru, with a market that doubled in 2009 and CDS prices were cut by better than 50% last year. Due to the increased debt standing of the nation and its strong 107% rally in the overall stock market, foreign investment is beginning to come in.

New ETF Now Available
Peru investors can now access that country's market via the iShares MSCI All Peru Capped Index Fund (NYSE:EPU). Data available shows the EPU up nearly 50% in half a year.

The Bottom Line
In addition to its better financial position, Russia, Argentina and Peru turned in three of the top four country stock market performances for 2009. This trio now possesses the greatest momentum and most improved confidence readings from among all the nations of the globe. (for more information about adding an international component to your portfolio, read Broadening The Borders Of Your Portfolio.)

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