Take heart, emerging-market investors.
From out of the haze that hangs over Asian currencies and stock markets shines an ancient Chinese truism: "Big chaos brings big opportunities."
The Hong Kong stock market on consecutive days last week swooned and then zoomed in record proportions.
The whipsawing is the market turmoil that, since July, has spread from Bangkok, through East Asia, then to Wall Street and much of the globe.
Stocks of many blue-chip companies in East Asia - the world's most dynamic region - now trade at fire-sale prices.
Indeed, by one measure, investing in emerging markets shows exceptional promise. Because stocks gauge expectations more than current economic performance, investors profit by identifying markets that will exceed expectations.
In many emerging markets, investor expectations are depressed while underlying economies remain fundamentally strong. The World Bank estimates that in the next decade, East Asia will grow an average 7.6 percent annually, more than double the pace of developed economies.
That spells potential for investors.
"One of the most important things to keep in mind about investing is, it's not about performance but about identifying opportunities where low expectations will encounter remarkably good surprises," says Bill Whitt, international funds analyst at Morningstar, the Chicago mutual-fund rating service.
But how does an investor find the opportunities, and the courage to seize them? For some analysts, the answer is simple: "Don't even waste your time."
"I wouldn't invest in East Asia until governments there get their arms around their problems and get over their growing pains," says Alfred Goldman, market strategist at A.G. Edwards in St. Louis.
Instead, investors could profit, with less risk, by investing in strong US multinational corporations, says James Coons, chief economist at Huntington National Bank in Columbus, Ohio.
To some analysts, though, now is an ideal time to ease into slumped emerging markets. "Even if markets go down some more, you're still buying equities at a very good value. It's impossible to buy at the absolute bottom," Mr. Whitt says.
"Investors who sit down, buckle their seat belts, and go along for a long-term ride in these countries should eventually come out with a good profit," says Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y.
Even skeptical analysts advise keeping 5 to 10 percent of equity assets in a diversified emerging markets mutual fund, as part of a roughly 30 percent share in international equities.
But experts also agree that Asian governments must remove the pitfalls that brought their Asian markets down.
Official tolerance for banks that make questionable loans is the biggest problem, analysts say. Also, export subsidies for domestic companies could backfire.
Still, even with reform, the recent meltdowns in Southeast Asia are probably not the last currency debacles. International capital flows are growing in size and speed. And the financial systems of many developing nations are fragile.
"In the future, global capital markets will punish fiscal profligacy and monetary irresponsibility more quickly and more severely than in the past," according to a new study by the Asian Development Bank.
"Currency turmoil will increase," predicts Mr. Coons, as some countries continue manipulating their currencies to show unjustified strength.
For investors bold enough to seek gems amid the debris, mutual funds devoted to global emerging markets are probably the best play. That way, even if one region stumbles, a more stable one can slow the decline in share price.
Closed-end funds, which trade on a stock exchange with a fixed number of shares, are especially appealing, some analysts say. Unlike open-ended funds, they invest a set amount of money. They can be more nimble, because total assets are often much lower than those of open-ended funds. And during a downturn they need not sell stock in order to pay off investors who redeem shares.
Whitt recommends several funds:
* Templeton's Emerging Markets Fund (closed end, ticker symbol "EMF"; 800-292-9293) and its open-end Developing Markets Trust are both run by the highly regarded Mark Mobius. "With Mobius, the long-term returns of Templeton have been very impressive," Whitt says.
* Morgan Stanley Emerging Markets (closed end, symbol "MSF"; 800-221-6726) is strong but more volatile.
* SSgA Emerging Markets Fund (open end, 800-647-7327) pursues a value-oriented strategy with good results.
* Vanguard International Equity Index Emerging Markets (800-662-7447) appeals to investors who prefer indexing to active stock-picking.