These countries have cheap stock markets (i.e. low average PE ratio) and plentiful natural resources:
- Russia (RBL, RSX, CEE)
- Brazil (EWZ, LAQ)
- Australia (EWA, KROO)
CEE and LAQ are closed-end funds (CEF) that invest in Eastern Europe and Latin America, with high concentrations in Russia and Brazil. However, neither CEF is trading at a juicy discount at the moment. KROO has a higher weighting in natural resource companies than EWA; the latter is overweighted in banks, bad because Australia’s housing market looks bubbly.
Fund managers like Russia and Brazil:
According to the latest UBS survey of top fund managers, 48% say Brazil will deliver the best performance in Latin America, Europe, the Middle East or Africa next year but 33% are going with the emerging consensus and saying they think Russia will win the prize.
However, OPEC seems to be of the opinion that the current $90 oil price is overpriced, and the fair-value range is $70-$80. See the Bloomberg story: OPEC Dismisses $90 Oil Price as Blip, Maintains Output Quotas
Source for international PE ratios is the Financial Times. Peru and Canada are resource-based economies that look overpriced.
Disclosure: I own EWZ.