The show opened up with some excitement about betting on the consumer through the banks and phone companies with a tilt toward Brazil and India.
They devoted quite a few minutes to Vodaphone (VOD) which has a pretty good footprint in many emerging market countries, my wife owns a few shares of VOD in her Roth IRA.
In a discussion about extending beyond BRIC they talked about Indonesia and Turkey (BRICIT?). Indonesia apparently also has a rising middle class exports coal and palm oil, Turkey is close to joining the EMU (this is old news) and they said has a high GDP growth.
Next up they talked about fund flows, the conversation went nowhere.
They then talked about geopolitical tension and again almost no meat on the bone. They talked a little about Pakistan which I should have mentioned yesterday. One of these decades it will be an important investment destination.
Then they made the case for water due to shortages of potable water which is/will be a real issue. They discussed PowerShares Water Portfolio (PHO), ABB, GE, Siemmens (SI) and Duoyuan Water (DGW).
Lastly the did short little profiles on "whales" Carlos Slim, Eike Batista and Stanley Ho. All three are certainly interesting people but a 60 second profile will not make anyone an more informed emerging markets participant.
The show was 30 minutes long which could have been plenty of time to explore all sorts of things without spending time on the whales. The discussion about VOD, although not stated was about using big multinationals with large EM footprints as a way in. Buying stocks like this is buying stocks that benefit from whatever foreign country but are not proxies for whatever country. Buying these beneficiaries is perfectly valid but not the same as buying an emerging market stock.
They spent some time on the water theme. There was nothing new for anyone who has followed the water theme for any length of time but again as a bigger macro there are quite a few themes tied into emerging market investing. The benefit to investing in themes, assuming a correct one selected, is the need-based capital flow behind them. Not enough drinking water is a serious problem. I do not know whether the problem will be solved but I do know a lot of money will be spent trying to solve it.
Buying PHO or ABB certainly gives water exposure but not emerging market exposure. DGW certainly would be direct EM exposure but the water businesses at GE ans SI are not big enough to move the needle on the stock prices.
The discussions about Turkey and Indonesia were useful insomuch as they point out that there are other countries besides Brazil, Russia, India and China. As discussed yesterday there are a lot of countries that are investable destinations and that list will grow.
So speaking of emerging markets, or frontier markets, Barron's mentioned that Paraguay is the world fourth largest grower of soybeans. I don't know much about Paraguay but apparently it is a democracy, is very poor, GDP growth has been healthy and a large chunk of the economy is agriculture related. The website for the local stock market does not have an English version (which is very rare), neither ADR.com nor BNY's ADR site show any ADRs (actually the country isn't even searchable) and I struck out looking for stocks on Pinksheet.com (just looked up a few names). CreditRiskMonitor has a list of publicly traded companies there but I cannot vouch for the accuracy of the list.There must be some reason why Paraguay may not be accessible but this being the weekend, it's tough to get an answer. It appears not to be an OFAC country though. I'll try to find out what the story is this week but if anyone already knows please leave a comment with the info. Where Vietnam was once inaccessible there is now an ETF. This will repeat with other countries, maybe even Paraguay. To be clear I don't know anything about Paraguay but am interested in learning about it, please don't add 1+1 and get eleven.
The picture is of a the New Bryce Motel which is a very neat looking retro place to stay but as Joellyn said there's nothing new about it.
1 comments:
I've searched the GE, SI, and ABB reports for "water". All three mention water multiple times in the marketing section up front; they begin with general discussion of the world's problems. None have a tangible measure of what $ they make from water.
ABB deals with power and automation; they mention water utilities as some of the many customers for their "Power Products" and "Power Systems", which can improve efficiency and save water.
GE appears to group their water-related revenue in with "Energy Infrastructure" which is about 20% of revenue. No mention of what portion of that 20% deals with water, but they do mention their direct involvement in water treatment.
Siemens mentions water the most, but I can't be sure what exactly they do to generate revenue from it.
Looking at these companies financial results, I can't find enough water to take a bath in. Am I missing something?
I hear the water argument as a reason to buy DBA - I am more confident agriculture will become more expensive than I am that any of these stocks will grow due to water.
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