It might be tempting to say “everything old is new again” in Russia, given the return of Vladimir Putin to the presidency after a four-year hiatus, an interesting development in the country’s political evolution. I think Russia has also evolved a great deal as an investment destination in the past two decades and holds great potential, although there is still more work to be done to open the markets and instill investor confidence. 
Russia is the largest country in the world in terms of land mass (17 million sq. km),1 covers nine time zones and boasts a rich and ancient history, abundant natural resources and a resilient and well-educated population. The literacy rate is near 100% and there are more than 1,000 institutions of secondary education attended by more than 8 million students.2 Russia has often been characterized by its harsh climate, and its economy has weathered equally harsh challenges throughout its history. I’ll save the history lessons for the books, but from an economic standpoint the past two decades have been characterized by periods of growth and crisis leading to progressive steps forward—then back. Read more…
The media has been quite fixated on the beleaguered Eurozone, but there’s a unique and often overlooked story coming out of some of Europe’s emerging markets that interests me more. While much of developed Europe is still struggling to get its fiscal house in order, much of emerging Europe already has. Some of the emerging markets in Europe deserve to be a greater part of the European story, and in my view, can offer compelling investment opportunities at attractive valuations. Read more…
Elections come and go, but the real test of a candidate might be whether the promises made on the campaign trail are actually put into place. Enrique Peña Nieto and his Institutional Revolutionary Party (PRI) emerged victorious in Mexico’s July 1 presidential election on the promise of reform and the end to old, “undemocratic” ways. Mexico’s stock market reacted positively to the initial election results; Mexico’s IPC Index (Indice de Precios y Cotizaciones) rose to a new all-time high in June and extended those gains in July.1 While the final election results are still in dispute, I’m encouraged by the economic progress being made in Mexico, and optimistic about its potential—assuming Mexico doesn’t backslide into counterproductive politics and policies.
Time will tell whether the “new” PRI has truly changed its ways, but the election (and the fallout afterward) has proven that Mexico’s people seem hungry for change. Assuming Nieto’s win holds up amid post-election vote challenges, when he takes office in December he will need the support of allies in both houses of Mexico’s Congress to aid his ambitious agenda. Nieto pledged a number of structural labor, tax, business and social security reforms designed to fuel Mexico’s economy. Read more…
Many feel that China is the engine for the world economy, and worry that if it slows down, we may be doomed to a recession or even a depression. However, I don’t feel it’s time to push the panic button. Yes, China’s growth is decelerating from the double-digits of recent years; various forecasters are predicting a possible GDP growth range of 7 – 8% this year. However, I think it’s important to emphasize that would still represent an impressive pace, and remember that China isn’t the world economy’s only locomotive.
Slowing growth is a natural part of the evolution of an emerging economy, particularly one as large as China, the second-largest economy in the world. Many of the world’s economies are facing slower growth trends this year, and China is also undergoing structural changes that often come with the side-effect of a few growing pains. It has been moving toward a more consumption-oriented economic model and loosening controls on the economy, which require some adjustments. A piece of good news for China in regard to these domestic-driven efforts is that new lending during the first half of this year helped drive fixed-asset investment in China 20% higher than levels seen during the same time in 2011.1
China’s slowing growth has, of course, resulted in quite a bit of market angst, and its stock market has suffered setbacks this year. The heightened concern about the country’s recent deceleration isn’t surprising, but we must remember that there are many fast-growing emerging and frontier markets that have been powering ahead and contributing to world growth. The world economy is not a single-engine affair. According to IMF projections, Africa is expected to be the fastest-growing continent on average over the next five years. And, if India is able to engage in meaningful reform, I can see the potential for growth rates there that could echo what China experienced 5-10 years ago.
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