Emerging concern

NEW YORK – John Mooney is concerned about the economy, whether it be in the United States, Asia or essentially anywhere else he might invest.

One of the great fears on Wall Street amid the credit crisis has been that the damage would spread around the world. And so it has, shaking not only major stock markets but also some of the most vulnerable investment areas: emerging markets. But some observers say that shouldn’t make investors reflexively shrink from investing abroad; they should instead evaluate whether the markets they are putting money into are fundamentally sound.

Mooney, an investor who lives in Norman, Okla., outside Oklahoma City, recently bought stock in AstraZeneca PLC, the London-based drug maker with global operations. The decision wasn’t based on where the company is headquartered but instead on its business: Investors often turn to health care stocks during economic slowdowns because, unfortunately, illness doesn’t idle even if Wall Street does.

“It seems to me that the health care companies across the board are looking reasonably valued, if not cheap. They’re certainly not sucker’s bets at these prices,” Mooney said.

Mooney, 31, is more concerned about the type of company he might invest in rather than where the company is located. Right now, though, he doesn’t see much abroad that piques his interest.

“It certainly does seem like we’re going into a slowdown and I believe the emerging markets are more vulnerable than most people believe,” he said. “I’m not sure if the risk-reward propositions in other places, such as Asia, are favorable. The Geiger counter isn’t going off.”

The same problems that have hit Wall Street, including concerns about faltering credit quality and fears of economic slowdown, have weighed on global stocks. In particular, emerging markets, which had logged spectacular gains in recent years, have lost some investors amid signs of trouble.

The pullback has been swift. In January, the world’s equity markets lost $5.2 trillion. The decline among emerging markets, which had generally put up bigger returns than developed markets, was 12.44 percent, according to Standard & Poor’s figures. Developed markets, by comparison, lost 7.83 percent last month.

Markets that had been making sure-footed advances showed declines. China lost 21.4 percent, India saw stocks decline 16.0 percent, Russia lost 16.1 percent and Turkey had the steepest declines at 22.7 percent. Only Morocco and Jordan registered gains in January by S&P’s count.

Wendy Trevisani, co-portfolio manager of the Thornburg International Value fund, said investors have to become more selective about where they put their money and that simply ignoring markets outside the U.S., especially developing ones, could mean investors miss unrivaled opportunity.

“With the early stages of the credit crisis in the U.S., there are certainly ramifications globally,” she said. Still, she sees opportunity: “You can get growth in China and in Latin America that you just can’t get in the developed markets.”