Colombia is a land of culturally rich colonial cities, lanky skyscrapers, pristine beaches, dense Amazon jungle, snow-capped Andean and Sierra Nevadan mountains, archeological ruins and home to author Gabriel Garcia Marquez. And, I should add, in my view, a country ripe with intriguing potential investment opportunities.
After ten years away from Colombia, I started my tour in Cartagena, on the country’s Caribbean coast and then made my way through Bogota, Medellin and Cali. By the end of my trip I was impressed by the developments I saw. One notable change is the stock exchange integration between Colombia, Chile and Peru, making it the second largest equity exchange in the region. Mexico and other countries have already demonstrated their intention to join.1
My recent visit to the enchanting Cambodia can only be described as exciting.
This charming kingdom is home to the Angkor Wat, one of the most important archaeological sites in South-East Asia. The temple contains the magnificent remains of the different capitals of the Khmer Empire, from the 9th to the 15th centuries and is a UNESCO World Heritage Site.1
The airport at Siem Reap is an international entry point because of the many tourists visiting. The terminal was very tastefully decorated with Khmer statues and decorations, but travelers may appreciate the quick customs and immigration formalities even more –something which is becoming rare around the world.
My worldwide pursuit of good investing bargains takes me to some magnificent countries. In my view, Brazil is certainly among the most beautiful and economically vibrant in the western hemisphere. Its Portuguese-speaking multiracial population of almost 200 million1 represents a growing and upwardly mobile consumer market.
Brazil is the fifth most populated country in the world and is chock-full of natural resources and rich farmland. Appropriately, the country’s name comes from the wood that grows along the coast, which was greatly valued by the European textile industry as a source of deep red dye as early as the 16th century. The nation is also home to the world’s largest, most biologically diverse tropical rainforest. In addition to being home to the Amazon River, the country’s Iguazu River leads to the spectacular Iguazu Falls and the Itaipu Dam, the world’s largest hydroelectric power plant by energy production.
On January 23, Chinese around the world ushered in the year of the dragon under the Lunar Calendar. The dragon is an auspicious and mythical creature in the Chinese culture. It is a symbol of power such that emperors in the historic days were regarded as the dragon’s ‘sons’ and many Chinese still call themselves “descendants of the dragon.”
With the debt situation in Europe continuing to further unravel and dim economic prospects in the U.S., many have come to believe that the star of the “dragon descendants” has the potential to rise even further in the coming years. China’s GDP growth is expected to moderate to around 8.2% in 2012, which is high compared to developed economies. 1
In 2011, perceptions regarding the composition of the global economy underwent a shift—instead of the U.S. being considered as the world’s key growth engine, investors began to realize that large emerging economies such as China and India were increasing their contribution to global GDP. While the U.S. saw its long-term credit rating downgraded in August and the eurozone was the center of heightened worries about sovereign debt for much of the year, some emerging economies witnessed positive growth in 2011.
That is not to say there were not challenges. As most developed nations continued to implement very loose monetary policy measures, washing much of the global financial system with liquidity, many emerging countries had to reckon with higher prices for goods and services, appreciating currencies and, in some cases, “imported” inflation. In their fight against high inflation, several emerging-market central banks embarked on tightening monetary policies for much of the year, which led to investors worrying about the prospects for economic growth. Indeed, the high-growth economies of China and other emerging Asian and Latin American countries lost some momentum as the year wore on, but to us they now appear poised for softer landings than their developed-market counterparts.
While emerging markets were considered a niche or “exotic” investment when I started investing in the late 1980s, many investors are now familiar with them and I’m seeing more and more investors turning to emerging markets as a way to diversify their portfolios. Yet, emerging markets themselves are not a homogeneous zone. Within the emerging markets universe, we believe frontier markets as a whole have begun to take an impressive lead in terms of growth.
Frontier markets, as their name suggests, could be described as “new or younger emerging” markets. Located throughout Asia, Africa, Europe and South America, they are often in a much earlier stage of economic development than larger emerging markets and many have only recently opened to foreign investing. This helps explain their high growth potential. Newer markets typically have more room to grow and the search for growth potential amid acute global volatility is encouraging many investors to expand their horizons.
The death of North Korean leader Kim Jong-il on December 17, 2011, escalated the uncertainty surrounding the regime change in Korea, which was preparing for a leadership transition in 2012. Very little is known about Kim Jong-un, the young man who is taking on the role of dynastic head. Some analysts feel that the death of Kim Jong-il sharply increases the risks and uncertainties from the secretive Pyongyang regime, which has significant consequences for security on the Korean peninsula and beyond. South Korea and Japan are most immediately threatened, but China and the U.S. are also deeply involved with vital stakes in North Korea’s future.
We believe Kim Jong-un, being untried and young, may not be entrusted with the power his father had, at least initially, and there is a chance that he will be affected by the rest of the Kim family. We think there is a potential risk that the regime may undertake some type of military activity or nuclear tests in an effort by the new leadership to demonstrate to the outside world that there has been no regime policy change, internal strife or reunification with the south.