Posts Tagged ‘emerging markets’
Okay… Now that I’m officially back in Baltimore - home from my two-week whirlwind of a tour that took me through five different countries and economies - I feel like I can be honest with you.
I don’t think all this growth is a good idea. I mean, when you’re in an emerging market, you expect certain things, like second-class toilets and cash-only bars. You don’t expect evil technology to throw you under a bus, or down an escalator, as was in my case.
I was minding my own business, making my way through what appeared to be a run-down train station from the late 1970’s. By the way, switching trains enroute to your destination is about a common as crossing the road here in the States.
Anyway, I’m with a group of tourists headed from the lower platform to the arrivals area where I’ll find out where my next train is leaving from. Everything was running smoothly. There are two escalators headed to arrivals: one is moving up and the other is stationary. I think it’s broken.
So while a group of folks step on the up escalator, I decide to get a hike in and head up the stationary side.
Big mistake, and I’ve got the bruises to prove it.
I wasn’t alone in my decision… Two fellows climed ahead of me. I had made it to the middle of the “steps” when the first guy gets to the top and triggers a sensor. Yes, this escalator was one of those new-fangled modern, energy efficient killers that starts working once someone crosses the fancy light sensor at the top.
Of course, this side of the escalator is headed in the opposite direction I am.
A battle ensues between little ol’ me, with my massive pack on my back, and the evil escalator. A mere three steps from the top, my legs are burning, and I’m stretching forward to reach the top.
Unfortunately, my heavy bag shifts forward, and I stumble onto my hands and knees like a drunk trying to hail a cab.
Not pretty.
And to top it all off, I’m so friggin’ tired, I can’t get back up! I end up riding the escalator all the way down to get on the right side, which I should have just done in the first place.
You get my point, don’t you? Emerging markets shouldn’t just plop some new technology into old surroundings. They should warn you, or something. I much prefer the low expectations of places like, say, underground bars with unusual names.
Take the Alligator, for example.
I spent the morning on one of the best museum trips I’ve ever taken. In Prague’s old town, there is a Jewish Quarter. There are at least five synagogues within a stone’s throw from each other, and a massive, yet tiny, cemetary that was quite impressive. I’ll get back to that seemingly oxymoronic comment in a second.
For 480 Czech Crowns (at yesterday’s close, that’s US$28.25) I bought a single ticket that gave me entrance to five synagogues, the Old Jewish Cemetary, a Ceremonial Hall and the Gallery of Robert Guttmann.
These sites were extremely crowded, but the attendants were very helpful in moving folks along, and every artifact was clearly explained in Czech and English. And Hebrew, in some instances. But let me get back to that comment for a minute.
The Old Jewish Cemetary is one of the most important sites on the ticket. It was established in the beginning of the 15th century and the oldest gravestone is that of Avigdor Kara from 1439. The whole area was less than the size of a football field, but has more than 12,000 gravemarkers.
Experts say that there are many more graves than gravestone in this cemetary, though. As the area was “expanded”, the residents brought in more dirt, and the new graves were layered overtop the old ones. Now, the top of layer is more than 15 feet higher than the street level.
It was one of the most haunting and interesting moments on the tour.
Another interesting sight was the Spanish Synagogue. The temple was inspired by Moorish design and was built in 1868. Rich wood panelling is gilded and painted withflowing designs and deep reds and blues. It made me catch my breath.
About four months ago, China’s sovereign wealth fund, China Investment Corp., announced that it would up the amount of money it pours into foreign investments by 30%. Now, CIC has about $90 billion to spend on assets abroad.
CIC has some complex dealings with internal state-owned banks, like the Agricultural Bank of China and China’s Development Bank. Not surprising, since on of CIC’s major funtions, indeed, the reason it was formed at all was to provide financial stability for China’s state-owned banks.
Near the end of last week, China’s Development Bank signed a $100 million loan contract with Banco de Chile (BCH:NYSE).
BCH is Chile’s second largest bank, and has also signed an agreement to open joint credit lines with CDB. According to the press release, CBD wants to invest in Chile’s “ports, bioceanic corridors and junior mining companies.
Chile is a major producer of copper, which is of great import to China. In fact, China’s capital investment in infrastructure like roads, factories, and property climbed 27.3% in the first half of 2008. That’s more than was expected, and this continued growth is sure to keep demand high for industrial metals like copper.
This should come as no surprise to any of you who have been keeping up with the sovereign wealth fund story. Barely a month ago, Kuwait announced it would boost investments in stocks, bonds and real estate in China, India and Japan.
But I did find one interesting story…
When the U.S. economy fell off a cliff, a bunch of investors fled to the “safety” of booming emerging markets, like China and Brazil.
Turned out to be a good bet for a while, until our credit crisis became a global disease… and even stellar markets had their corrections.
But now, on the slightest bump up in the dollar, some analysts are now questioning whether emerging markets is the best place for your cash. Some say that U.S. stocks are a better bet than foreign stocks.
What’s really going on is that other major currencies, like the euro and the British pound, are being hit by recession fears and the possibility of more bank write-downs.
The dollar hasn’t really risen that much on its own yet. We’re still seeing poor housing numbers and sky-high inflation. There have been bright spots in the U.S. economy, and I won’t deny that things are starting to look better, but a major shift back to holding only U.S. assets in your portfolio is a big mistake.
