Overview Of The Global Investing Landscape

Includes: BMA, DEO, EMIF, KOL
by: Roger Nusbaum

A commenter on Tuesday's post asked:

Not sure where would be the place to invest. Europe is seemingly always in crisis, Japan has problems at least as bad as ours, do you trust the Chinese banks and markets? OK, so what's left? Latin America, where it seems like more countries are installing more statist regimes? What foreign markets, exactly?

I cover this ground a lot but it is important and so worth repeating. The reader has made some observations that I have been talking about for ages, namely the problems with most of Europe, Japan and Chinese banks.

Here are the countries that we own, have owned and may own in the future, with a little bit of color on each. Invariably I will leave a couple off the list.

  • Australia: we're out for now but it is commodity based and the cycle is different than the US
  • New Zealand: we've been out for years but I expect to get back in. It is agricultural based, the volatility is very low but the trade deficit will always be an issue
  • China: we are in via the weightings in KOL and EMIF, the banks stink, I like the toll roads which are utility-like. I also like energy (ex-solar), materials and industrials
  • Mongolia: this is in the future and probably resource oriented (ditto Kazakhstan)
  • Singapore: we don't own Singapore but there are a lot of very interesting companies, the banks are generally on very solid ground but they seem to always get crushed when the market goes down a lot
  • Indonesia and Malaysia: if we get involved with plantation stocks as part of the ag theme, I would consider these countries
  • Israel: we've had exposure here for many years but it has been beaten up very recently
  • The Middle East: not too much interest here. Qatar has a lot of natural gas but I am not aware of any easy way in
  • Russia: we owned Russia once for just a few clients and it did not go badly by any means. It seems obvious that oil and resources will bring continued prosperity but something just seems off
  • The rest of Eastern Europe: the stories on the ground in a couple of places have some promise (Czech Republic, Slovakia, Estonia, Turkey) but we have nothing there for now. They are difficult to access too. Turkey is easier to access
  • Scandinavia: all four countries are relatively healthy, enduring much more of a cyclical event compared to bigger countries in the euro
  • UK: we own Diageo (NYSE:DEO). There are also a lot of foreign companies listed in London that would not be proxies for the UK
  • Switzerland: I think ex-the banks the country can be owned
  • Africa: I've been saying we are going to do something there soon but we have not. I have a few things in mind but the timing has not felt right yet
  • Canada: we have a bank and an energy company
  • Brazil: there are some issues now with a strong currency and inflation but the world still needs its stuff
  • Chile: relatively low volatility but the market has been hit lately. It has great economic and fiscal fundamentals and steady demand for equities thanks to what amounts to privatized social security
  • Colombia: kind of an earlier stage Brazil (different resources). We own an oil company
  • Peru: in terms of across the board, three countries is enough for now but there are a lot of positives going on here and Humala will not be as bad as originally feared
  • Argentina: this is probably a good destination for farm-related stocks. I read good things about Banco Macro (NYSE:BMA) but given the issues here I can't wrap my head around the concept that buying an Argentinean bank could be a good idea