Emerging market investors have little to cheer about these days. EM currencies are falling, corporate debt is rising, and economic growth, to say it with Christine Lagarde’s words, is “cause for concern”.
But that shouldn’t stop venture capitalists and private equity investors from making a bullish bet on EM entrepreneurs. Why? Because, Turkish-American author Elmira Bayrasli writes in her book From The Other Side of The World, “the next great innovator – the next Steve Jobs – won’t be from Silicon Valley, but from Mexico, Nigeria, Pakistan or Turkey”. What makes her so sure of that? Read more
If there’s something weird / And it don’t look good / Who you gonna call? For many people in emerging markets, that question, coined 30 years ago in the movie “Ghostbusters”, might be painfully relevant.
But lacking the option to call on actor Bill Murray in a boiler suit, hard-pressed families in emerging markets are increasingly relying upon the assistance of relatives who have emigrated in search of work to the US, Europe and elsewhere.
But does the money remitted back home by migrant workers from emerging markets comprise a meaningful source of relief for recipient families and the economies they live in. Or are these remittances merely a phantom solution?
In his new book “Migrating into Financial Markets”, Matt Bakker looks for the answer. Read more
How do you classify the countries known as emerging markets (EM)? That question has become more relevant since the FT declared the EM term unhelpful and obsolete as a definition.
So what should replace the EM term? Alexander Kozhemiakin recently argued that investors should look at the risks affecting an EM’s growth to get a sense of how safe their investments in particular markets might be.
Andrew Karolyi, a professor of Emerging Market Finance at Cornell’s Johnson School, however, also focuses on measuring risk, and has come up with a matrix to do so. In his book “Cracking the Emerging Markets Enigma”, Karolyi ranks 57 emerging markets and developed markets by averaging their score on six components. Read more
“Buy when there’s blood in the streets,” Baron Rothschild once famously said. Applying that wisdom to emerging markets, Gavin Serkin names Nigeria as the most promising emerging market for the next decade. Is he right?
Looking for “the best place in the world to put your money”, Serkin, Emerging Markets editor-at-large at Bloomberg, traveled to 10 preselected emerging markets. Armed with ‘excel spread sheets’ and taking along emerging markets investors such as Mark Mobius, he visited Kenya, Myanmar, Romania, Argentina, Vietnam, Nigeria, Egypt, Saudi Arabia, Sri Lanka, and Ghana. The results of that emerging market Odyssey are in his book “Frontier”. Its conclusion is surprising: the world’s most promising emerging market is also one of the most violent. Read more
In spite of Mikhail Gorbachev’s warning this month that the world is on the brink of a new Cold War, it is Asia that we should be worrying about, says former Australian Prime Minister Kevin Rudd. The region is home to seven flashpoints which, if they erupt, could end the greatest economic growth story of the 21st century.
“We face this remarkable set of circumstances where global growth will be driven from Asia,” Rudd told beyondbrics in a recent interview in Dubai.“But Asia from a political perspective is a potentially unstable region. So the world [should have] a deep interest in not just the future growth trajectory, but also the political and security circumstances which underpin that equation.” Read more
Can China innovate its way out of a prolonged economic growth slowdown? Shaun Rein, managing director of the China Market Research Group, believes so. In his new book, “The End of Copycat China – The Rise of Creativity, Innovation and Individualism in Asia”, he argues that China will start innovating now because it has to – and that it didn’t before simply because it didn’t need to. That’s an interesting theory, but is he right?
Rein first does battle with common perceptions that the Chinese political system or culture limits its ability to innovate. It’s not because China is a communist-led country with limited individual freedom, that it does not come up with corporate inventions, he says. Read more
After enduring 13 days of straight losses, Nigerian stocks have the questionable honour of being the world’s worst performing this year. Yet the man in charge of the stock market is not worried about a full-blown crisis. “I’m not expecting to see a sell-off, and indeed we haven’t seen a sell-off” said Oscar Onyema, chief executive of the Nigerian Stock Exchange, in an interview with beyondbrics. Rather, he says “the Nigerian stock market has adjusted downward, as you would expect in an OPEC country.” Read more
“We are waiting for you!” Finance Minister Arun Jaitley told potential investors this week at the India Economic Summit in New Delhi. But the response among delegates in the conference hall may not have been the one he was hoping for.
“We are waiting for him too,” said one foreign investor, who declined to be identified, expressing impatience with the pace of reforms to make India more business-friendly. Some local industrialists struck a similar note: Anand Mahindra, chairman of Mahindra & Mahindra, one of the largest industrial groups in India, couldn’t hide his anticipation: “The pressure is on [the government] to walk the talk, and see the talk become action.” Read more
International air travelers will recognise the tag line from the HSBC campaign in airports worldwide: “In the future, South-South trade will become norm, not novelty”. If it depends on the Mahindra group and other Indian conglomerates, that tag line could become reality with regards to Africa and India.
Taking optimism to a new level, a collection of African leaders and Indian industrialists dared to dream big during a closed session of the WEF India Economic Summit in Delhi, agreeing to an informal ambition of $500bn Indo-African trade by 2020. Read more
“Taj Palace? What is Taj Palace?” our tuk-tuk driver asks confusedly. Many Indians won’t know – and perhaps they wouldn’t care – but the splendid hotel in New Delhi’s diplomatic enclave is where the WEF India Economic Summit will be taking place this week, the first big face-off between the new government of Narendra Modi and Indian business owners.
Normally, the meeting serves as India’s annual warm-up to Davos and another round of shoulder-rubbing between India’s industrial who’s who. This year, it will be spiced up by the presence of several ministers in the new government (though not Modi himself), making it their most-high profile meeting with business leaders so far. What can we expect? Read more
India emerges from the latest World Economic Forum Global Competitiveness Report as the sickest member of the BRICs. It is ranked a lackluster 71st among 144 countries surveyed, down 11 places from last year and 22 places from five years ago. Moreover, it is ranked the lowest among its peers for the first time in years (China comes in 28th, Russia 53th, Brazil 57th).
The consequences of India’s lower GDP growth are also increasingly obvious: whereas India’s GDP per capita was higher than China’s only 15 years ago, it now stands at only a quarter of that of its Eastern neighbor.
So how come this all happened, and what can be done about it? Read more
“When eating an elephant, take one bite at a time”, US Army officer and Vietnam veteran Creighton Abrams once said.
In his new book, The Rise of the New East, Ben Simpfendorfer does just that. His elephant is “The East”, the group of almost 50 emerging markets ranging from Turkey to China that is home to well over half of the world population.
Simpfendorfer gives his topic a thorough treatment. While his insights seem logical and intuitive, taken together they give an impressive oversight of into key trends shaping the region. beyondbrics noted five insights that particularly stood out. Read more
For Chinese, Africa is the new El Dorado. An estimated 1m Chinese have moved to Africa in the last two decades in pursuit of a more prosperous life. They are opening shops, buying land, and exploiting mines. But how welcome are the Chinese in Africa? And is their arrival a force for good?
Looking for answers to these timely questions, Howard French, a former Shanghai bureau chief of the New York Times, undertook a grand voyage through the African continent. He met with a diverse array of Chinese merchants, entrepreneurs and business men and asked them about their practices, methods, and outcomes. Read more
The most significant threat to today’s emerging markets is hidden in plain sight. No, it’s not education, it’s not health and it’s not income inequality. The most ignored threat to EMs development is violence. That’s the main thesis of “The Locust Effect”, a new book about emerging markets. Read more
On Thursday, the publication “Vaccine” publishes a study that shows the mass vaccination in Africa does not require constant refrigeration in specific cases. To be precise, 155,000 people in Benin got a vaccination against meningitis, with a vaccine kept in temperatures of up to 39°C.
To a layman that may not sound like game-changing news in the fight against preventable diseases. But actually, it may be. “It’s a breakthrough, because it breaks a dogma,” Michel Zafran, the WHO coordinator on the project, told beyondbrics. Read more
You can bring a horse to water. But can you stop it from drinking (too much)? In the upcoming year of the horse, China’s leaders need to figure out exactly that, as its local governments thirst for debt threatens to derail the economy. Will they succeed?
Liu Mingkang, former chairman of China’s Banking Regulatory Commission (pictured), left no doubt about the government’s intention to stop the flood of lending: “The signal is clear cut,” he told beyondbrics in an exclusive interview. “The torrent [of local government debt] is becoming quite limited.” Read more
It would be exaggerated to call Davos the “money Oscars”, as Jon Stewart did on the Daily Show. But this year, WEF participants did like to think of countries as winners or losers, especially among emerging markets. In this last roundup, beyondbrics summarises who, to paraphrase the FT, “was hot – and who decidedly not.” Read more
What will the EMs next “black swan” be? With the crash of the Argentinian peso, the difficult Syrian peace talks in Montreux, and Iran’s nuclear situation, WEF participants last week had enough scenario’s to reflect on. But one fear of Davos participants about emerging markets was a rather unexpected one: the EM middle class.
Nouriel Roubini, in the CNN debate on Emerging Markets, was quick to point it out. “Paradoxically, it’s not the proletarians that are in the street in countries like Brazil, Chile, India, or Ukraine,” he said. “It’s the middle class. They’re becoming restless.” Read more
On Friday evening in Davos, Paul Kagame, Nouriel Roubini and Carlos Ghosn discussed the next steps for emerging markets. Do you want to know what their predictions were?
EM private equity investors don’t. “We don’t get our EM news here from public debates,” says Paul Fletcher, from PE firm Actis, at Davos. His former colleague Sev Vettivetpillai agrees agrees: “You need to be on the ground yourself to understand what’s happening.”
However, they didn’t mind sharing their view on EMs. Read more
It was quite the wake-up for attendees at the WEF debate on Chinese-American-European cooperation. After a “well meant advice” of Harvard Professor Joseph Nye about Chinese policies in the South China sea, Wang Jianlin, China’s richest man, had had enough.
“I’m not happy with the professor’s comments,” he said. “This is an economic debate. Not a political one. This is not polite.” In this initial and later reaction, he revealed a few interesting things about his strategy and temper – and made it seem as though influential Chinese are misunderstood by the outside world. Read more