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The Long View on Emerging Markets
I managed to catch a few comments on TV in the distinct northern accent of Jim O’Neil, the fabled analyst who invented the “BRIC” term, and who has been kicked upstairs to the chairman’s seat at Goldman Sachs International (GS) in London.
Jim thinks that it is still early days for the space, and that these countries have another ten years of high growth ahead of them. As I have been pushing emerging markets since the inception of this letter, this is music to my ears. By 2018 the combined GDP of the BRIC’s, Brazil (EWZ), Russia (RSX), India (PIN), and China (FXI), will match that of the US. China alone will reach two thirds of the American figure for gross domestic product. All that requires is for China to maintain a virile 8% annual growth rate for eight more years, while the US plods along at an arthritic 2% rate.
“BRIC” almost became the “RIC” when O’Neil was formulating his strategy a decade ago. Conservative Brazilian businessmen were convinced that the new elected Luiz Inácio Lula da Silva would wreck the country with his socialist ways. He ignored them and Brazil became the top performing market of the G-20 since 2000. An independent central bank that adopted a strategy of inflation targeting was transformative.
If you believe that the global financial markets are back into risk accumulation mode, as I do, then you probably should top up you Brazil position, as it has lagged the smaller emerging markets so far this year. Jim Chanos, you may be right about a China crash, but you’re early by a decade!
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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I am such a seller of emerging markets. The market has such a short memory sometimes, it's amazing.
growth and development....nonsense...this is a race to the bottom
Next week I'm going to Suzhou, the second biggest industrial city in China next to Shangai for work. First I thought it was some rat-hole they where sending me to until I checked it on the Internet! And I've been to China over 7 times in the last 5 years!
What I mean is: Most of us know shit about China. And because of the communication gap, most of us will never get to know it.
All I can tell you about the Chinese is this:
Don't trust them! If they didn't rip you off, IT'S BECAUSE THEY FORGOT TO DO SO!
So keep that in mind when you ever think of buying Chinese equity stocks of a company you've never heard of, in a city you've never heard of, run by a CEO you've never heard of.
Even beggars put a sign over their heads over there saying:
"THE LOTUS INTERNATIONAL TRADING & MANUFACTURING GROUP"
Leo. There are no barriers to entry in solar and China practically stuffs capital down its entrepreneurs shirts. China solars may get volume growth but thats a reason to short Q-Cells not buy Chinese. Stop with the solar already, the fundamentals are gash.
You say fundamentals of solars are "gash" and I say BULLOCKS, GO BACK TO SCHOOL!
If you want to see hot, watch Chinese solars over the next three years!