EM Fund Stock Picks & Country Commentaries (December 13, 2023)
EM Fund Stock Picks & Country Commentaries (December 13, 2023)
A possible reality check about Javier Milei in Argentina, a number of Singapore stock picks from various local brokers, several Polish stocks that will benefit from the EU releasing frozen funds, etc.
Some quick takes from this post:
A number of Singapore stock picks from various local brokers.
Several Polish stocks that will benefit from the EU releasing funds that had been frozen by Brussels under Poland’s previous government.
A possible reality check about Javier Milei what Argentina really needs to do to do (but won’t be the first country to do so…).
More emerging market or frontier market funds with good economic and/or portfolio commentaries, etc have updated their documentation up to the end of November.
In a recent podcast covered later in this post with two non-mainstream economic or political commentators, Javier Milei and Argentina were discussed and its worth covering their thoughts. It was mentioned how dollarization is just a “Wall Street thing” as everyone wants to open the country up to properly develop its resources (although it was observed that dollarization would “make the country a colony…”) plus “Wall Street” (aka the West…) has fewer and fewer places to invest as the BRICs etc. continue to expand.
The podcaster also observed that Milei “seems like a cartoon” and that he (being more of a Libertarian) can tell when a Marxist tries to write or act like a Libertarian. Milei gives him the same feeling e.g. “this is the way they think we talk...”
The guest then added that when you listen to Milei longer, he also gets the same impression e.g. when you start to think more about what he says, it triggers more questions that Milei does not have good answers for. All of this makes him very suspicious (Note that he seems to already be backtracking on a number of promises or some of his rhetoric e.g. Argentina will stay in Paris climate agreement under Milei, negotiator says).
It was then noted how Argentines are fed up with inflation, etc. and just want stability to plan their lives (don’t we all???) with the only real solution being defaulting on the IMF debt - but another country will likely have to go first. In other words, its another case of “new rhetoric, but the same outcomes…” for Argentina.
The discussion then turned to the ultimate solution when it comes to odious debts that much of the developing world suffers from: Either reforming the UN, multilateral banks, and other such Western controlled institutions by changing legal frameworks or shifting alliances-legal frameworks, etc. towards the BRICs (e.g. Russia, China, etc.). They also believe this gives an opening for China and Russia as the West can’t sanction, invade (e.g. Libya, Iraq, etc.), or color revolution everyone.
Again, the podcaster and his guest are not fund managers, but their thoughts have implications for emerging and frontier market bond investors in the West should they turn out to be right. For example: Our October 3rd post discussed a litigation financing stock that has profited from a recent Western Court ruling concerning Argentina’s renationalization of YPF (although I am not aware of them collecting anything on this ruling, and Argentina has a history of ignoring such rulings).
But what if indebted emerging or frontier markets not only start ignoring rulings from Western courts, but simply use the odious debt doctrine to default on their debts to Western controlled institutions and align with the BRICs (or rather with China and Russia)? Again, the West can’t sanction, invade or color revolution everyone, but such a move by one country (probably not Argentina under Milei) could have a domino effect.
What country might be the first domino to fall? It was mentioned in the podcast that Egypt’s President is unpopular and could even loose power should the war in Gaza escalate or continue to drag on. I would add that Egypt has serious economic and debt problems (e.g. Egypt faces external debt reckoning after borrowing spree) and might make a good candidate. And they could always try to get more financing from the Gulf, Russia, and China (or play everyone off against each other), plus everyone would have to be careful given the strategic importance of the Suez Canal…
Either way, emerging and frontier market bond investors with a longer term horizon need to be ready for a changing world order where the West and its financial institutions are not necessarily in control OR there are alternatives to such institutions. Likewise, anyone thinking of speculating on change in Argentina (The Flawed Global X MSCI Argentina ETF's Holdings (September 2023)) should be prepared for new rhetoric with the same outcomes…
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This graphic is being widely shared on Twitter:
It comes from this monthly post from an Indian paper:
📰 India tops Mint's EM tracker for the eight straight month (livemint.com) November 2023
This short interview with an Australian fund manager talked about Asian credit investing:
📰 With income investing back en vogue, it pays to think beyond the obvious (Livewire Markets) November 2023
US fixed income and credit command a lot of attention, but a region in our backyard offers higher yields for equivalent credit quality.
As John Stover, portfolio manager for the Tribeca Asia Credit Strategy points out, however, Asia is much bigger than just China and there are opportunities beyond equities.
He and his team are “finding easier and more attractive opportunities in the rest of the region” and he points to countries such as India, Indonesia, Japan, Korea, and Thailand.
The first piece is short while the second piece also discusses changes to their top country positions:
🔬 EM Bonds Are In Good Shape for 2024 (Van Eck) December 2023
Conditions for emerging markets bonds remain supportive headed in 2024, thanks to a substantial yield cushion and the potential for a Fed orchestrated soft landing.
🔬 EM Bonds Guideposts for 2024 (Van Eck) December 2023
The economic backdrop appears supportive for emerging markets bonds headed into 2024. In this blog, we discuss five guideposts that are all largely supportive for the asset class.
This emerging markets outlook (intended only for professional investors) is from the end of November and comes with a transcript:
🎬 WEBINAR: Ashmore’s 2024 Emerging Markets Outlook (Ashmore) 52:18 Minutes (November 2023)
Ashmore’s Head of Research, Gustavo Medeiros, discusses the outlook for Emerging Markets in 2024.
Intro - 00:00
Gustavo's 2024 outlook remarks - 01:30
Audience Q&A - 16:05