Let’s examine developments in three emerging markets that are making headlines: South Africa, India and Russia. For investors, the news is a mixed bag.

We’ll start with South Africa. This promising but still-troubled country recently announced its budget for next year, which is of particular interest because a big question mark has been hanging over the country’s gross domestic product (GDP) growth.

Economists and analysts predicted that the country’s economy had likely grown by only one percent last year, particularly since the country had experienced widespread labor stoppages, the rand had been weak and inflation remained a top concern. So it was welcome news when it was announced that GDP had grown 2.1 percent in the fourth quarter and 2.5 percent for the year.

While last year’s growth was a far cry from pre-recession levels, it gave South Africa’s finance minister Pravin Gordhan the political cover he needed to announce a 2013 budget that included a number of crackdowns on corporate cheats.

With a population just over 50 million, there are only about 6 million taxpayers in South Africa. As a result, every tax rand counts and it is estimated that South African businesses dodge about ZAR1 trillion in taxes by venue shopping between tax jurisdictions.

As part of the new budget, the South African Revenue Service will work with companies that are based in the country, but claim most of their profits in low tax jurisdictions where they have minimal operations.

While I’m generally not in favor of higher business taxes, South Africa has been experiencing widening trade and budget deficits largely due to the weak rand. At the same time, it hasn’t been bringing in enough revenue to cover the costs of critical infrastructure improvements throughout the country that would ultimately strengthen its economy.

By streamlining its system of taxation to increase revenues, South Africa should finally be able to address critical infrastructure deficits such as roads and rail, power generation and other concerns in the country’s interior.

The option of selling off state-owned assets has also been put on the table to address the country’s budgetary shortfalls. Considering that the government has ownership interests in everything from mining and energy production to hotels and sugar plantations, not only would privatization bring in hard cash, it would also get the government out of running enterprises which it frankly has little business being in.

Consequently, while the budget news was a bit of a mixed bag, it sets the stage for meaningful reforms to come—assuming the African National Congress, the dominant political party in the country, can get its infighting under control.

India Resurgent

The other good news for the week is that India has officially called its economic slump over.

India’s finance ministry recently reported that the country’s economy will grow between 6.1 percent and 6.7 percent next year, although that was predicated on a number of caveats: a normal monsoon season, slackening inflation and continued global economic recovery.

Believe it or not, the monsoon is actually one of the major drivers of the Indian economy. Regardless of whether you attribute it to manmade climate change or natural cyclic shifts, India’s monsoon has become increasingly erratic over the past several years.

Under a normal cycle, two months of torrential rains fall across much of the country. If too little rain falls, agriculture faces major challenges since there’s still little irrigation and power production becomes more difficult. If too much rain falls, the ensuing flooding can destroy crops while business is disrupted for an extended period.

If the monsoon falls to one extreme or the other, it translates into full percentage points of GDP impact.
The ministry report also notes that reforms are badly needed to ensure that growth remains strong into the future, including business deregulation, labor market liberalization and expanding access to financing both at home and abroad.

The Finance Ministry also announced that it would bump public spending up by 16 percent to help spur economic growth.

While 6 percent growth will be a far cry from India’s economic heyday, it’s important to keep in mind that only China and Indonesia are likely to outgrow India next year, making India a key growth driver in Asia.

Russian Machinations

In “From Russia, With Malice” two weeks ago, I wrote that Russia was the one emerging market that made me too uncomfortable as an investor. The constantly shifting political winds make government interference in the business world too great a risk.

Earlier this week, it was reported that Alexei Navalny, a prominent anti-Putin critic who led a number of street protests after the December 2011 parliamentary elections, is once again under investigation by Russia’s Federal Investigative Committee (FIC). At issue is whether he possesses the proper qualifications to practice law in the country and whether he gained his credentials illegally.

While this case doesn’t exert a direct impact on any publicly traded company in Russia, I bring this up because the FIC is under the control of President Vladimir Putin and isn’t subject to any other oversight. Putin has routinely used the FIC to dog his political opponents either into submission or prison.

The timing of the investigation seems a bit odd, considering that Navalny had practiced corporate law for several years prior to becoming a political activist and it doesn’t appear that any questions have ever been raised about his qualifications or competence in the past.

Three other charges are pending against him, all of which have to do with embezzlement or theft, all of which have been made since Putin’s election.

In all fairness, there may be a kernel of truth to the embezzlement charges—what we consider shady business dealings very often amount to standard business practices in Russia, given the nation’s systemic corruption. But based on the timing of the charges, they appear to be politically motivated.

The likely conclusion is that Russia is undergoing a period of power consolidation, with Putin maneuvering to silence opposition and to gather as much power into his own hands as possible. Until we see how this process shakes out, there’s just too much political risk to delve into the Russian markets.

Portfolio Roundup

BHP Billiton (NYSE: BHP) reported that its revenues were down by 14 percent for the first half of its fiscal 2013. Earnings fell by 43 percent to $5.7 billion, largely due to stubbornly high costs, slow growth in China and a generally stagnant global economy.

However, it’s important to keep in mind that the mining giant faced a tough half-over-half comparison, since many commodity prices were at or near peaks in the first half of its fiscal 2012. BHP Billiton’s woes largely stemmed from highly volatile iron ore and metallurgical coal prices, both of which fell sharply in the period.

Despite that weakness, I remain positive on the company’s future. Over the past year it has made $4.3 billion in asset sales, strengthening its balance sheet and paring back underperforming properties. That’s also helped BHP fund a boost in its dividend.

I also look for commodity prices to rebound, particularly iron ore, as China’s economy continues to recover. BHP Billiton is also working towards greater operational efficiency, which will pare back the company’s costs.

BHP Billiton is a strong buy under 80, as the global economy strengthens.

Shares of Keppel Corp (OTC: KPELY) have bounced up, after the announcement that the company’s marine and shipbuilding building unit has secured two contracts, both from repeat customers, worth approximately $200 million.

MODEC and Toyo Offshore Product Systems has engaged Keppel’s Brazilian subsidiary to integrate the topside modules of a floating production storage and offloading (FPSO) unit for use off the coast of Brazil.

FPSOs are used to store oil pumped up from below the seabed and then transfer it to ships for transport to the mainland; the Brazilian unit is scheduled for delivery in the second quarter of 2014. Once the modifications are complete, the FPSO will have a production capacity of 150,000 barrels a day and a storage capacity of 1.6 million barrels.

Keppel’s Singapore shipyard has also been engaged to fabricate an internal turret for a new FPSO which will soon begin construction and will be installed in the Icthys Field off the coast of Western Australia. The project is scheduled for completion by the third quarter of 2014.

Buy Keppel Corp under 20.