First up is this interview with Mark Mobius for Hard Assets Investor. Mobius said his four favorite frontier markets are Vietnam, Kazakhstan, Ukraine and Nigeria. The story in Vietnam mostly about demographics, he likes Kazakhstan for resources, Ukraine for farming and Nigeria not for oil but for banking and consumer products.
Accessing Vietnam is pretty easy with the Market Vectors Vietnam ETF (VNM). Interestingly it looks to me like it has had a negative correlation to the iShares Emerging Market ETF (EEM) for the last three months.
I've mentioned Kazakhstan several times over the years as having big corruption problems and also the potential to become incredibly wealthy as a beneficiary for increased resources demand. One way in is through Kazakhmys which has an ADR symbol KZMYY but it looks as though it has not traded since May 5 so that might not be the best symbol to use. The primary listing is in London where it trades plenty of volume.
The Ukraine is very difficult to access directly but there are one stock listed in Sweden that owns farm land in the Ukraine; Trigon Agri (TRAGF) which also has subsidiaries in Estonia, Russia and Cyprus. One oddity is the Black Earth Farming (BLERF) which is also listed in Sweden with most of its farming in Russia also has a subsidiary in Cyprus. Both stocks would be very difficult to trade.
Nigeria is one I haven't studied at all. The Market Vectors Africa Index ETF (AFK) has 18% in Nigeria.
Next up was an interview with Seth Klarman for Advisor Perspectives that covers a lot of ground. One line that made a big impression was when he said "the pressure to be fully invested was the undoing of many managers during the financial crisis." If you are an advisor you want a client who is impatient not scared. If you are a do-it-yourselfer you are far better off being impatient than scared. The difference between the two is very powerful.
Yesterday I was reading something and there was a mention that rhodium was now investable for retail but there was no ticker symbol provided. A rhodium ETF would be a great case study for whether or not investment demand can actually wag the dog or not. So it turns out that there is not an exchange traded product but this was a reference to actually buying some rhodium from Kitco. According to the site you can buy "pure rhodium powder in a convenient, tamper-proof bottle" for $2930 (as of the last time I looked) per ounce.
Lastly, I am scheduled to appear on CNBC today about 30 minutes before the the US close to talk about the energy sector, I hope you can check it out.
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9 comments:
Whilst on a month's holiday in Vietnam and, shortly after, having a conversation with an HR manager who's manufacturing company had recently pulled their operations out, I came to the conclusion that its demographics are a two-edged sword. ie they like to party.
Kazakhstan has been on my radar since a friend, working in the same industry, broke new ground in the capital. He said the locals were very friendly and unassuming but those in senior positions promised much and gave very little.
It would make sense to invest in picks and shovels in Nigeria.
Roger,
This may or may not be helpful and you may or may not agree.
The amount of money one should dedicate to frontier markets is exactly the amount of money one would be willing to put in a paper bag, set it on fire, and then throw it out the window.
how many frontier markets have gone to zero?
I'm not that guy, but how many? Tons - think of places where capitalism once existed, and then didn't - like East Germany, Cuba, Venezuela, etc.
It's easy to forget revolutions happen when they haven't happened in a while.
"If you are a do-it-yourselfer you are far better off being impatient than scared."
I sort of agree with this, but the "fight or flight" instinct inherent in all of us can also be our undoing in investing. It can lead to disasterous decisions such as selling equities at market lows. If impatience leads to action for action's sake rather than following a well-crafted plan, then one is probably better off with an advisor who can hold your hand when things don't go the way you wish. IMO, this is one of the most difficult aspects of investing.
It would be interesting for you to elaborate on this notion.
M: If you leave your money in places that are openly rebelling or are Nazi Germany and leave your money there waiting for it to be over then yeah you run the risk of your money going to zero.
an example of 'impatient' is being frsutrated with a low yield versus chasing a high yield at the wrong time.
Take a look at Kinnevik (Sweden). It's an investment conglomerate with frontier market holdings (including Black Earth Farming, among others). Easy to trade via Schwab.
English reporting: http://www.kinnevik.se/en/
Roger, I have to agree with Jeff Miller on this, particularly after reading your blog for the past several years. Sounds like something you would say :)
http://tinyurl.com/3x5ly73
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