Broad Based
India has been a mystery for centuries. In the late 1400s Christopher Columbus set out in search of India after hearing stories of its tremendous wealth and discovered America by mistake. Over six hundred years later we’re back with a similar curiosity as to how to tap into the growth and wealth that India represents.
I guess a coup isn’t what it used to be. Thirty years ago, the word coup was delivered with grainy TV clips of presidential palaces being looted and burned, riots in the streets followed by Castroesque military parades and speeches. Former leaders were exiled, imprisoned or worse. These were the days of very messy, bloody and rapid third world political change.
It’s been widely reported that more cars were sold in China in 2009 than in the U.S. While
we expect the domestic auto industry to recover, it’s unlikely that sales in the U.S. will top
that of China ever again. Riding the powerful wave of emerging middle class entrants,
China is already second worldwide in passengers per mile, carrying about 24% of the
world’s railway transportation volume.
Coming out of the worst economic crisis in since at least the early 1980’s and likely
since the Great Depression, our first reaction is that there’s no better time to build a
foundation than at the bottom. Clearly, this is the beginning of a new era for the
financial services industry but there is evidence that the effects of 2008 will seep into
the greater macro environment.
This is the first in a 3-part series attempting to look into what exactly is an
emerging market and then to take into consideration the inclusion of emerging
market investments into an investment portfolio. The latter topic is quite challenging
since what constitutes the function or objective of the portfolio is up for
question.
Not long ago, things were much simpler in the markets. The lengthy Bull Run spoiled investors into simply waiting for central banks to keep the monetary policy in check, as growth seemingly remained assured for perpetuity. Then, quite quickly, the world changed as forecasters called for the end of capitalism.
Emerging markets are no fad. In today's world of quick sound bites, along with global warming there are not many other truly long term stories. Every civilization and nation started somewhere and at some point the interest grew to where others wanted “in” either by conquest or investment. Consider any of today’s developed markets and one realizes they were at one time an emerging market - in some cases not so long ago.