Tuesday, April 25, 2017

Asian markets are doing better than US markets


In Asia just about every market has outperformed the U.S. In Europe, just about every market has outperformed the U.S. measured in U.S. dollar terms. So, I think that the impact of an improving Chinese economy is being felt more in other emerging economies than say, in the United States.

Tuesday, April 18, 2017

Vietnam and China have become major economic forces over the last 30 years

Recently PWC published a study about the long-term outlook of the global economy and about the ongoing shift in the balance of economic power in the world which essentially showed very clearly how some countries had become very important economic powers over the last 20 to 30 years including China and Vietnam and also India to some extent. 

That study concluded that by 2050, India, purchasing power adjusted, could be the third largest economy or the even the second largest economy. If you look at what has happened in Europe and the US where despite all the fiscal stimulus and money printing you have essentially very anaemic growth and you look at China where you have around 6%-7% growth while India has over 7% growth, who knows? 

Over the long term if you can grow even 5%, which in the global economy is a very rapid growth rate compared to Europe and the US, as an investor for the next 5 years, 10 years or 20 years, I would find ways to invest in India and in emerging markets in general. 

The emerging markets that is going to grow probably the most is Vietnam and Indo-China, Cambodia Laos, Myanmar. But having the outlook for India and with the proviso that we do not get into a major military confrontation. If we have peace and are nor beset by any huge natural disaster like a pandemic, then I the outlook for the Chinese economy, for the Indian economy, for emerging markets in general is far superior to the outlook in our rotten western democracies. 

Sunday, April 2, 2017

April 2017 Market Commentary Summary

Last week, I was interested in re-reading an article which had appeared last November (before the election) in The New York Times by Op-Ed columnist Nikolai Tolstoy entitled Consider Monarchy, America. Tolstoy is a historian and author of several books. He is also a committed monarchist.

Before rejecting Tolstoy’s views as outrageous I suggest my readers to listen to his arguments carefully. The reason I am discussing political systems is that I came across a study by PwC which paints a rather pessimistic picture for G7 countries (US, UK, France, Germany, Japan, Canada and Italy) relative to E7 countries (China, India, Indonesia, Brazil, Russia, Mexico and Turkey) for the future. The PwC study is entitled The long view: how will the global economic order change by 2050? Its key findings are as follows: emerging markets will continue to be the growth engine of the global economy. By 2050, the E7 economies could have increased their share of world GDP from around 35% to almost 50%. China could be the largest economy in the world, accounting for around 20% of world GDP in 2050, with India in second place and Indonesia in fourth place (based on GDP at PPPs).

A number of other emerging markets will also take center stage – Mexico could be larger than the UK and Germany by 2050 in PPP terms and six of the seven largest economies in the world could be emerging markets by that time.

Meanwhile, the EU27 share of world GDP could be down to less than 10% by 2050, smaller than India. PwC also projects Vietnam, India and Bangladesh to be three of the world’s fastest growing economies over this period.

The PwC study rightly says that emerging market investing requires the “patience to ride out the storms we have seen recently in economies like, for example, Brazil, Nigeria and Turkey, all of which still have considerable long-term economic potential based on our analysis,” but I should point out that we also had some storms in the G7 economies over the last 30 or so years (Japan post 1989, all markets post 2000 and also post 2007).

Also, whereas I do not believe that it is an ideal time to buy equities I equally think that relative to the US, emerging markets are about as undervalued as they will become.

Bloomberg recently reported that sales of art and antiques dropped 11 percent to $56.6 billion in 2016. The decline, on top of a 7 percent slide in 2015, wipes out the gains seen in 2013 and 2014, when sales reached an all-time high of $68.2 billion.

Noteworthy is that art sales are not much higher than in 2007 – ten years earlier despite a huge increase in purchases by Chinese collectors.


Tuesday, February 28, 2017

Resource stocks and Emerging markets are cheap relatively

Resource Stocks are undervalued, and I think Consumer Staples are also reasonably priced as well as REITS. 

I have a large exposure to REITS in Singapore and Hong Kong.