Uzbekistan was nearly closed off to foreign investors until 2016. Unlike Russia, Kazakhstan and other Soviet states, However in recent years, Uzbekistan has started to change in a big way. In 2017 the new president started a reform program, simplifying business regulations, divesting SOEs, floating the exchange rate, allowing visa free access for tourists 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 […]
Yesterday the CFA Society hosted a webinar led by Mark Yusko, at Morgan Creek Capital Management: The Global Search for Alpha: All Roads Lead to emerging markets. Emerging market economies have experienced disruption of pandemic lockdowns, capital outflows, commodity price shocks, and supply chain disruptions. Policy makers have responded aggressively and creatively. It appears this […]
A lot of analysts are concerned that Covid-19 is going to devastate emerging markets. After all, they are less prepared to deal with massive demands on their domestic health infrastructure. Worse yet, a higher portion of the population in emerging markets likely lives in crowded conditions. This view is corroboratedd by recent stories showing a […]
EM/FM countries have unique growth prospects no longer present in the developed world. Several secular trends support faster growth for EM/FM markets as a group. Demographically, EM/FM countries outside of China are younger, and family size is often larger. Nearly 90% of the global population under 30 is in emerging markets. According to research from […]
Over short and medium time frames, emerging markets are inevitably driven by capital flows as much as company fundamentals. Fund flows have been consistently out of EM/FM countries over the past decade. Consequently, most developed world investors are underallocated to EM and FM stocks by any reasonable standard. GMO, which advises institutions on asset allocation, […]
Emerging and frontier markets have been broadly out of favor for over a decade, and are trading cheaply, however you measure valuation. According to Morgan Stanley: The 2010s were the worst decade for emerging stock market returns since the 1930s. When the coronavirus began to impact stock markets in mid-February, emerging markets were 18 percent […]
Emerging and frontier market stocks are cheap, widely hated and underowned among institutional investors. Yet they represent a major long term opportunity. A macro regime change could lead to massive upside for investors who position appropriately. As a group, EM/FM stocks typically have multi-year trends that are separate and sometimes directionally opposite from developed markets. […]