Monday, November 4, 2013

Follow-up to Previous Post re EM: "Buying EM By Not Buying EM!"

Good article in the WSJ re the issues surrounding sustainable growth in EM countries.  Yet another reason why 'indirect' ownership might be the better risk-adjusted tactical

Asked by one reader where I stand on the article's points, optimistic or pessimistic, I replied:
Optimistic.  I think EM countries will continue to emerge and evolve.  Especially middle classes who want ‘stuff’!  (George Carlin would appreciate that!) It’s inevitable, imho, that people around the world in the most remote places, will no longer be hidden from modern luxuries.  Technology is already creating an awareness that I believe will translate into a growing consumer demand for ‘stuff’.  As for the industrial space, as I’ve said for a while now, I think there’s lots of inventory of those durable goods already in the hands of EM countries, so lots of the low hanging fruit for Caterpillar (CAT) and Deere (DE) are probably picked.  They’ll still have lots of biz there, but it’ll get tougher.
I’m looking to add to consumer and tech names…Nike (NKE), McDonalds (MCD) Unilever (UN), Cinemark (CNK), Himax (HIMX) (semi conductors for ‘wearables’ and other things consumer), etc.
Check out my latest blog post re the McKinsey study suggesting that by 2025 EM countries will represent almost ½ of the Fortune Global 500 less than 100 now.  That argues for using US and European based companies to seize the EM opp more than direct ownership, unless the latter presents real value with reasonable transparency, visibility and corporate governance.

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(Please note: This article is solely meant to be thought provoking and is not in any way meant to be personal investment advice. Each investor is obligated to opine and decide for themselves as to the appropriateness of anything said in this article to their unique financial profile, risk tolerances and portfolio goals).
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Additional Disclaimer: currently long many stocks/ETFs incl NKE, MCD, UN, CNK, HIMX, CAT, DE.  Positions may change at any time without notice.

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