What are we looking for?
We're going to take a look at how you'd go about setting up a screen to keep tabs on the world's stock markets without just looking to the major indexes for any given market.
To put it another way, what we're really looking for is a tool for comparing the apples in one country to the apples in another country.
This can be surprisingly hard to do given the number of variables involved, but luckily there are already professionals on the case.
Standard & Poor's, index builders par excellence, set up their S&P Global Broad Market Index (BMI) in 1989 to establish a way of measuring international stock performance based on a clearly defined set of rules.
Today we'll focus in on what the emerging world looks like according to those rules and tomorrow we'll tackle the developed world - but remember the rules are the same across all countries.
How the screen works
S&P runs this screen annually to determine which companies meet the requirements for the index.
S&P says that to make it onto the list, a stock must have at least $100-million (U.S.) of its shares available in the public market and at least $50-million worth of shares must have traded hands in the 12 months prior to the annual rebuilding of the index. The index builder also says that stocks are excluded if their market capitalization falls below $75-million.
All the stocks that make the grade are subsequently classified by size as large-cap, mid-cap or small-cap stocks - we've broken these out in the table so that you can see the country-specific breakdowns by member size.
Countries are classified as either emerging or developed based on S&P's evaluation of factors including macroeconomic conditions, political stability, legal property rights, trading conditions and feedback from institutional investors.
According S&P Indices, approximately 10,000 companies in 45 countries currently make up the S&P Global BMI and more than 2,200 companies fit the bill for inclusion in the emerging markets index.
What did we find?
In the world of emerging markets, European Union members Poland, Czech Republic and Hungary, as well as EU hopeful Turkey, stand out as the markets that witnessed the sharpest rebounds in July. It was a performance that speaks directly to the ebb and flow of the macroeconomic concerns that have dominated trading so far in 2010.
In a commentary accompanying the latest report on the index, S&P senior index analyst Howard Silverblatt noted that "a tempered relief over the sovereign debt issue [in Europe]permitted investors to concentrate on the markets."
That sentiment shift actually turned into buying interest across the board among the names that met this set of criteria, with all the countries here ending July on higher note than they began it. We'll have more on that trend tomorrow when we look at the developed markets.