In May Xi Jinping introduced China’s “dual circulation strategy”. At first this passed without much comment, even from China insiders. However, seasoned China hands are starting to talk about the serious economic implications.Part of the reason this dual circulation strategy took so long to get attention is its vagueness. The specifics aren’t finalized yet, and […]
Part of the reason we built this site is because of the historical divergence in equity markets. Developed markets, led by the US are historically expensive. In contrast, emerging markets and frontier markets are historically cheap. There are several ways to take advantage of this historical opportunity. One way is through a top down approach, […]
Often companies in emerging markets look deceptively cheap if you don’t consider the macro background. For example, we were recently looking at buying stocks in Uzbekistan. We found a rapidly commodity exchange business that was trading at 4x P/E. But is 4x P/E really cheap if inflation is rampant, and the currency is rapidly depreciating?You […]
Its hard for active managers to outperform passive. Yet one area provides an opportunity: emerging markets. It turns out a simple trick can help boost performance when compared to standard emerging market benchmarks. The trick is to avoid State Owned Enterprises. Here is a chart from the FT showing how much better private companies in […]
Traditional economic theory holds that crashing currencies have a self correcting mechanism. More expensive imports drive new demand for home made replacements, helping to boost the economy. Additionally, devolution makes exports comparatively less expensive for buyers abroad. Yet experience in a world where most trade is invoiced in dollars contradicts this idea, as a recent […]
Whether its war, terrorist attacks, populism or protectionism, investors can’t escape geopolitics. This is especially true for emerging markets, where politics sometimes matters as much as economics.Geopolitical risk is becoming increasingly important. Trump has drastically altered America’s foreign policy. Radical populist leaders are rising around the world. Fiscal and monetary policy is increasingly intertwined. Covid-19 […]
Studies of extreme medical abnormalities have led to breakthroughs in understanding how anatomy and physiology works in normal people. Early studies of industrial and transport accidents led to more advanced engineering, and created the field of materials science. Extreme Economies, by Richard Davies applies this principle to apply the same concept to economics. This approach […]