Reuters Rethinks Emerging Markets Rout Refrain
Another international media company back-peddles from the story that all emerging markets are doomed, doomed, doomed in the era of modest Fed tapering. We’ve steadfastly maintained that it is intellectually lazy to treat all developed economies the same, all emerging economies the same, or all frontier economies the same. It matters what the character of a nation is and what the leadership is like and whether the price of the market is at bubble vs. bargain pricing. Switzerland is developed and extremely free. France is developed and thoroughly socialist. Argentina is in the ’emerging’ category (despite the fact that it is submerging) and so is Hong Kong, one of the most free nations in the world. Comparing a country with a national debt which is 20% of GDP to one where it’s 220% is incoherent.
The mainstream press this week, starting with the Financial Times and moving then to the Wall Street Journal and now Reuters, has figured this out.
“To be sure, there appears to be little panic among long-term investors who still insist cheaper emerging market equity will pay off over time in economies with higher growth potential, better demographics and better balance sheets than much of the developed world.
“The long-term investment case hasn’t dramatically changed,” Franklin Templeton’s veteran emerging markets investor Mark Mobius said last week.
“There are good reasons at least why full-blown sovereign and systemic crises can be avoided, unlike the late 1990s of rigid exchange rates and modest hard cash reserves.
“But the chillier international winds will expose any deeper structural and political flaws in capital-hungry emerging economies. And less patient mutual funds – where net $14 billion of outflows last month alone exceeded 2013 as a whole – may not want to hang about for that long.
“One choice may be to switch between interest-rate sensitive markets of the ‘Fragile Five’, Turkey, Brazil, India, Indonesia and South Africa, and those more hip to global growth at large, such as South Korea, Russia and China itself.”
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.