In this electronic age, news and rumors can spread like wildfire across the globe, heightening market volatility as markets react in real time. It can be difficult for investors to see the forest for the trees as they try to dodge the downdrafts immediately in front of them, sometimes making hasty missteps. As my emerging markets team has wound its way through a series of recent European professional conferences, the challenge of long-term investing in a short-term world has been a key theme. At our last stop in London, I invited Tom Wu, Vice President, Senior Managing Director, Templeton Asset Management Ltd. and a veteran of more than two decades on our emerging markets team, to blog about his perspective on long-term investing in a short-term world. Read on for his guest post. Read more…
I truly believe it pays to be an optimist in life. As a long-term investor, it’s practically part of the job description. You can fearfully view a crisis as a time of loss and peril, or you can choose to view it as a time of opportunity with potential for positive change. The Eurozone crisis has triggered a ripple effect across global markets, and many investors are expressing pessimism about the economic health and sustainability of the region. Me? I’m an optimist. With elections in Greece now behind us, there are still many unanswered questions. But when all is said and done, I believe Europe should emerge stronger, regardless of whether or not Greece chooses to leave the Euro (which I think is unlikely). Read more…
No matter what decision we face in our lives, there is always some type of risk involved. But when you take a few risks, the experience can often be quite rewarding. When it comes to investing, some risks are present no matter what market you’re in. It’s also true that there are risks that are especially important to consider when it comes to the emerging markets. Tackling this two-fold topic, I’ve joined my colleague Wylie Tollette, Senior Vice President and Director of Performance Analysis and Investment Risk at Franklin Templeton in the recently published post, “The ‘R’ Word in Emerging Markets,” on Beyond Bulls & Bears.
Free, fair and open trade is essential to fostering a thriving global economy. In the past, when economic conditions have deteriorated, we’ve seen governments in developed and emerging economies alike engage in protectionist policies. With growth in many countries slowing this year (tied in part to the crisis in the Eurozone), I’m concerned that protectionism could be on rise. In the end, I believe these policies don’t really protect anyone.
One of the biggest challenges many markets face right now is insufficient growth. In addition to their own domestic challenges, many countries are scrambling to avoid getting pulled in by the Eurozone crisis. Given that the Eurozone is an important trading partner for many emerging economies, there is concern that emerging countries are particularly vulnerable to an increase in protectionist policies. However, the good news is that the percentage of exports from emerging economies in general to Europe has been declining, so the impact would likely not be as great as it would have been a few years ago.
Brazil, the “B” in the emerging markets entities known as the “BRIC” countries (Brazil, Russia, India, China), has entered what I think can fairly be described as a rough patch of sluggish growth. Since my last update on Brazil, the country has experienced heightened economic challenges that threaten its competitive position to slip.
In 2011, Brazil’s growth eased to 2.7% after having reached 7.5% in 2010.1 The Eurozone crisis and the impact of a stronger Real on the competitiveness of Brazilian industry are partially to blame for this growth slowdown. A strong currency, lack of human resources in high-tech areas and unwillingness to allow imports of strategic materials may all be placing Brazil in danger of losing its competitive edge.