Posts Tagged Emerging Markets

I just finished reading the long special report in the Economist that concludes the obvious…the rich world hasn’t come to terms with the already new reality. Emerging markets are emerged. Adrian Wooldridge concludes, “No visitor to the emerging world can fail to be struck by its prevailing optimism, particularly if his starting point is the recession-racked West. The 2009 Pew Global Attitudes Project confirms this impression. Some 94% of Indians, 87% of Brazilians and 85% of Chinese say that they are satisfied with their lives. Large majorities of people in China and India say their country’s current economic situation is good (see chart 3), expect conditions to improve further and think their children will be better off than they are. This is a region that, to echo Churchill’s phrase, sees opportunities in every difficulty rather than difficulties in every opportunity.

This special report will conclude by asking what all this means for the rich world and for the balance of economic power. In the past, emerging economic leviathans have tended to embrace new management systems as they tried to consolidate their progress. America adopted Henry Ford’s production line and Alfred Sloan’s multidivisional firm and swept all before it until the 1960s. Japan invented lean production and almost destroyed the American car and electronics industries. Now the emerging markets are developing their own distinctive management ideas, and Western companies will increasingly find themselves learning from their rivals. People who used to think of the emerging world as a source of cheap labour must now recognise that it can be a source of disruptive innovation as well. ”  This magazine is the eternal defender of the Anglo model of economic development and the United States in particular, but they are also savvy about picking up on trends.  As I read this report, it reads like an grudging acknowledgment of the new reality.

The New Master. Period. That's What They Really Mean

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It all seems to good to be true? Barclays had this to say this morning,
Emerging Markets
China: Local government debt, not as bad as it seems. We think the size of local government debt is manageable and that the resolution of any rise in NPLs will likely be in an orderly and gradual fashion.

Emerging Asia (ex-China): A stronger Q1
We are seeing a resurgence in industrial output and exports in EM Asia, supported by rising demand, inventory rebuilding and a more favourable pricing environment.

EMEA: Monitoring inflation
In contrast to other regions, inflation is still moderating in most EMEA countries, allowing for policy rates to remain low, and in some cases, even to be reduced further.

Latin America: Great expectations
With macroeconomic stability seemingly secured, policy-makers and multilateral organizations alike seem to be reverting towards a higher goal: long-term growth.

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Friends, I know, it takes guts to apply your precious capital on my advice in Emerging Markets and Foreign Currency deposits after a wrenching financial crisis and get out of everything you know, like that S and P 500 fund or those municipal bonds or the US Dollar Bank CD (backed by a bankrupt FDIC). I know. It takes courage to take all the old recipes and throw em’ out and go into the “scary” world of foreign companies and foreign monies. But you must in order to protect your financial freedom, to protect your capitals purchasing power for the future.

Blogging for Freedom!

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Financial Freedom

Everyone trained in economics becomes a big believer in free trade because it simply creates more wealth and stimulates competition. The fight is always over the distribution of that wealth which is a political one, not economic. I found this article in Forbes interesting because the institute discovered that “The potential GDP gains are significant, between $300 billion and $700 billion annually, and well balanced between developed and developing countries,” This is another huge confirmation that the “poor” world and the “rich” world are beginning to, economically, look more alike. I am not implying the wealth distribution in Norway is the same as it is in India, but this is a very, very important point for investors and wealth management. Companies are not intrinsically riskier just because they are based in a “developing” nation. Emerging Market portfolios therefore are not necessarily riskier anymore….but they are providing more growth. The risk premium also still makes many stable companies with excellent prospects, “values”.  Think about it.
http://www.forbes.com/feeds/reuters/2009/08/16/2009-08-16T095110Z_01_LF593453_RTRIDST_0_TRADE-DOHA-FORECAST.html

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The Doha Deal that Never Dies