Myanmar, once known as Burma, has democracy standing on its doorstep.
For decades under Myanmar’s former military regime, Aung San Suu Kyi led the fight for democracy as head of the National League for Democracy (NLD). A Nobel peace laureate, she retained her popular appeal over two decades while she was either imprisoned or under house arrest. Now free, on April 1, 2012 she won a landslide victory in Myanmar’s parliamentary by-elections. Drawing cheering crowds, her supporters call her “Amay Suu,” or “Mother Suu.” Hopes are high she will nurture this formerly troubled nation into a new era of democracy and personal freedom.
Many emerging market brands are no longer waiting backstage. I’ve noticed this in my travels for a while now. Most recently, for instance, I noticed people queuing at a shopping center in the U.S. all waiting to buy footwear made by a South American company. And while dining at a restaurant in another part of the world, I observed a diner at the table next to mine ordering Mexican beer.
As I said, this is not the first time I’ve noticed emerging market brands entering the developed world’s consumer mainstream. China’s hunt to acquire global brands may be seizing the most news headlines lately, but there are companies in emerging nations—including Brazil, India, Russia, Mexico and South Korea—that have been on the same search. For example, an Indian company bought a luxury British car manufacturer and a Chinese company purchased an American IT company.
In investing, as in life, there is a yin and yang. The balancing act between inflation and growth that economies often face is perhaps even more pronounced in the emerging markets world: stimulate growth too much, and inflation could flare, but stamp out inflation too hard, and growth could freeze. The fire of inflation seems to have moderated in some emerging markets (at least for the time being), and some central banks, including those in China, Brazil, Indonesia, Russia and Thailand, have taken actions over the past few months to stimulate growth. I believe the fundamentals in many emerging markets look supportive of these actions—as long as it doesn’t tip out of balance. Inflation is certainly a big challenge, and I believe it will probably be a very important consideration going forward.
No country is immune to inflation and emerging markets are no exception. In emerging markets a larger percentage of the total population is in the lower-income bracket, so inflation in such items as food and fuel are particularly important. In 2010 and through the first half of 2011, many emerging markets were engaging in policies to control inflation. However, tightening measures—such as increasing interest rates or raising bank reserve requirements—can come at a potential cost, possibly triggering currency appreciation and slowing growth. We’ve seen a bit of both in some emerging economies.