EM Fund Stock Picks & Country Commentaries (August 11, 2024)

Impact of demographics & debt on FX, investment cliches, tech stock ROIC potential, repeat EM founders, Chinese stocks too big & cheap to ignore, India's budget, mining executive pay, etc.

As of early August, more fund updates have become available along with new research:

• 🔬 PGIM Fixed Income has this piece: The Next Chapter in EMD: Static Vs. Dynamic Allocations - Emerging markets debt is a vast, global sector consisting of several different asset types across dozens of countries, each with its own governance structure, fiscal policy, monetary policy, and sovereign yield curve. While this diversity provides a compelling opportunity set and value proposition, it can also create confusion for investors considering the optimal allocation to EM debt.

• 🎙️PGIM Fixed Income also has this podcast covering recent elections and how they impact fiscal policy aka deficits, etc:🎙️Recent Global Elections—From the Ballot Box to Fiscal Policy (26:14 Minutes) - This episode features PGIM Fixed Income’s Katharine Neiss, PhD, Deputy Head of Global Economics and Chief European Economist, Mehill Marku, Head Geopolitical Analyst, Cathy Hepworth, CFA, Head of Emerging Markets Debt, and host Tom Porcelli, Chief U.S. Economist.

• CME Group has this series that is full of charts:

  • 🔬 How Demographics and Debt Influence FX Markets - Mexico has one of the world’s lowest debt ratios, while Japan has the highest… Typically, countries with higher debt and more retirees per worker will see their currencies fall

  • 🔬 Weak Currencies, High Debt and Aging Nations: Part 1 - Debt and demographics might be among the most important and least discussed factors influencing long-term movements in foreign exchange rates. From mid-2019 to mid-2024, the currencies of countries with an older population underperformed those that are younger and less heavily indebted. If this relationship continues into the second half of the decade, debt and demographic trends might give us insight into the future direction of foreign exchange rates.

  • 🔬 Shifting Demographics, Debt and Currencies: Part 2 - In our previous paper, we examined how the currencies of the most highly indebted countries with the largest ratio of retirees to the working age population tended to fall versus those with less debt and younger populations. In particular, we looked at the two extreme points of the demographic and debt spectrums, Japan and Mexico, and how Mexican peso futures contracts outperformed yen futures contracts. In this paper, we explore the state of the rest of the world as we head into the second half of the 2020s.

• 🔬📰 Platinum Asset Management has this interesting piece covering a number of tech stocks: Tech stocks and business model brilliance

  Working within the Platinum investment process means seeking to own a share of a company when it has attractive growth potential and when it's priced at a discount to its potential to deliver a sustainably high return on invested capital (ROIC). To understand that ROIC potential we ask four high level questions:

  • What value does the company bring to customers?

  • Why is this company preferred by customers over competitors?

  • Why does this company have pricing power?

  • Is management trustworthy and credible?

• 🔬 Platinum Asset Management also has this piece Danish shipping stock that is one of the world's largest owners and operators of tankers: The shipping news is good. But for which company?

  Our investment case for Torm PLC (NASDAQ: TRMD) rests on four pillars.

  1. Supply rerouted by geopolitics

  2. A reshaped refinery network

  3. Slow boats

  4. No new competitors

• The following funds or fund managers have new factsheets, commentaries, research pieces, podcasts or webinars that would interest investors in Asia: