When it comes to passive or active investing – ie selective stock picks vs index tracking – there’s a big difference between companies based in emerging markets, and their counterparts in developed markets.
You might think that investors in emerging market companies would be in the “pick-and-choose” camp – index tracking is more common in developed markets, surely, and the companies are better known? Actually, it’s the other way round. Continue reading »
If investors were asked to give a chunk of money directly to emerging market governments, most would refuse. But in the stampede towards low-cost, index linked investment in emerging markets, many will effectively end up doing just that, according to a report in Monday’s FTfm.
Arjun Divecha, chairman of GMO’s board and manager of three of its emerging markets funds, says GMO research shows that about 35 per cent of the constituents of the widely benchmarked MSCI emerging market index are companies that are owned or controlled governments and that these companies actually account for about 70 per cent of the earnings generated by that index. Continue reading »
Steve Jacobs, chief executive of BTG Pactual, thinks institutional investment in emerging markets will increase from the current 5-10 per cent of a typical portfolio to 10-20 per cent within five years.
Brazil, Russia, India and China. What do they have in common? Political risk and, consequently, discounted stock prices, says Phil Langham, portfilio manager for emerging markets at RBC Global Asset Management in London.
Brazil has been a concern for some time. “There seems to be a constant dribble of policy changes which narrows visibility,” he says. “Brazilian stocks are seeing an increase in their risk premium.” Continue reading »
As many emerging market investors have found, GDP growth doesn’t easily translate into stock market appreciation. In fact, when it comes to investment decisions, macroeconomic factors often don’t even come into it.
Reyl Asset Management, based in Geneva, has an EM equity fund that is ahead of the MSCI EM index by around 40 percentage points since its July 2009 launch. Instead of worrying about the latest IMF economic outlook, the fund starts from company fundamentals and pretty much ignores macroeconomics. Continue reading »
Petrostates are often authoritarian, oil dependent, with indulged elites, and have low market liquidity. Want to invest?
Perhaps you should. According to a Citi research note, from equity analysts led by Kingsmill Bond, money is flowing into petrostates at a rate of nearly $2tn a year - “greater in real terms than they saw at the peak of the last oil boom”, prompting the question: Is this “the greatest peacetime transfer of wealth in history?” Continue reading »
Many Asian bond investors may feel that they are standing at the crossroads. Most bond yields have tightened significantly since the beginning of the year. Typically, for investors who hold little or no Asian bonds in their portfolio, they may ask whether it is too late for them to get into the market now. Investors who have stayed invested in bonds may ask whether it is a good time to exit or trim down their positions. Continue reading »
It’s a basic rule of investing: don’t buy shares in companies whose directors and advisers have poor track records.
The trouble, however, is that digging up this kind of historical data has traditionally been a laborious undertaking, particularly for retail investors without access to expensive terminals like Bloomberg or Reuters.
Not any more – at least in Hong Kong, thanks to a powerful, free, online database created by David Webb, the corporate governance activist. Continue reading »
Beijing announced on Wednesday that foreign institutions no longer need a minimum $5bn under management and a five-year track record before they can apply for a quota to invest in mainland Chinese capital markets. The threshold is now $500m in assets and two years’ operational experience.
To China bulls, this is another step towards a deeper and more open financial system. Continue reading »
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