So far all I’ve only watched the introductory four-minute video and I can tell you that it’s worth noting first that this is eminently more watchable than the video attempts I’ve seen from certain other outfits in this space who shall remain nameless.
I’m all for the DIY revolution, but sometimes paid professionals are paid professionals for a reason.
Anyway, the point here being that if you understand and trust TCX’s general outlook and approach to new markets (which I do) and if you bear this in mind as you watch how TCX has chosen to chronicle its impressions of last month’s Myanmar gathering, this is worth your time.
In particular, I would like to draw attention to the emphasis on regulatory concerns voiced by some of the participants interviewed and encourage a lot of reading between the lines here. Maybe I’m reflecting my own bias, but the way I’m interpreting these answers is that nothing is happening overnight and that if your inclination is to ask a question like, “When will this begin to pay dividends?”, well…I think you may have taken a wrong turn somewhere.
Huge kudos to Andrew Henderson of Nomad Capitalist and Chris Tell of Capitalist Exploits for this discussion of investment prospects primarily in frontier markets. The focus is mainly on Mongolia, but they also cover Fiji, Myanmar and Cambodia. The podcast is worth listening to in its entirety, but the discussion of risk and corruption in particular grabbed my attention for its rare candor. I don’t think Henderson consulted any of the things I’ve previously said about due diligence and liquidity risk, but some of his questions may as well have been lifted directly from some of my thoughts on these themes, most recently here and here.
Since I can’t find any transcription of the interview anywhere, I thought I’d transcribe the salient points directly since this is definitely something I’ll be referring back to: Continue reading →
This is a five minute segment, I can’t find a transcript of it anywhere, and since I have little faith in the permanence of this video’s availability, I thought I would take a few minutes to do a quick transcription. Leopard Capital’s Doug Clayton, whom we last heard from here, went on CNBC Asia last Thursday to discuss frontier markets. Much like CNN, CNBC’s level of sophistication I find to be nothing less than infantile within the US context, but fortunately its foreign bureaus seem to appreciate the importance of a quality conversation and this interview is no exception.
As for Clayton, he opens with the claim that frontier markets are “high growth, low risk”, which I personally find slightly misleading, but other than that minor point, he has some interesting things to say here:
Martin Soong: As China’s and India’s economies show signs of slowing, is it time to turn attention to other markets in Asia for opportunity? Doug Clayton is managing partner at Leopard Capital, he joins our guesthouse with Slim Feriani of Advanced Emerging Capital. Doug, good to see you, welcome back and we talked about a month or so ago, when you were up in Hong Kong. Have your views changed at all on frontier markets? Continue reading →
The International Crisis Group’s recent report on Myanmar, “Myanmar: The Politics of Economic Reform”, provides more good overview material for those of you seriously considering entering this market. It’s fairly brief and I highly recommend downloading it and reading it in its entirety—you can basically finish this while waiting to board a flight. But if you’re too pressed for time, these are the main new ideas I took away from it:
1. Mind the export structure—this is an economy that is still very agrarian:
In fiscal 1938, four commodities – rice, minerals, timber and other agricultural products – accounted for nearly three quarters of the total. In the decade from 1990 to 1999, the picture was similar, with the same four commodities accounting for over 70 per cent by value (including border trade). After 1999, garments briefly became the top export item (30 per cent), until U.S. sanctions imposed in 2003 caused a major decline in the garment industry. The other significant recent change has been natural gas, which became the top export item in fiscal 2001 and has accounted for up to 40 per cent of the total in recent years. Continue reading →
With all due respect to Wells Fargo, hearing they’re looking into Frontier Markets investing is sort of like hearing J.C. Penney and Marks & Spencer are looking into selling guayaberas and sarongs (unless JCP and Marksies have entered Quezon City? Anyone?). Stereotypes aside, after watching Fox Business interview Wells Fargo Private Bank CIO Ron Florance and then reading about WF’s latest Southeast Asia due diligence trip, it looks like they’re serious. Fox Business, on the other hand, either insists on talking down to its viewers, or just assumes we’re all as goo-goo eyed about this as they are, but whatever, let’s have the clip done with so we can move on to the substance of what’s happening here:
Leopard Capital CEO Doug Clayton’s interview with CNBC’s Bernie Lo has my attention right now because it provides a good starting framework for thinking about due diligence approaches to frontier markets investing. Take a look at the clip first and then we’ll think about why any of this matters:
Statement by the President on the Easing of Sanctions on Burma
Today, the United States is easing restrictions to allow U.S. companies to responsibly do business in Burma. President Thein Sein, Aung San Suu Kyi and the people of Burma continue to make significant progress along the path to democracy, and the government has continued to make important economic and political reforms. Easing sanctions is a strong signal of our support for reform, and will provide immediate incentives for reformers and significant benefits to the people of Burma. Continue reading →
Aside from the significant steps forward for human rights and other political freedoms, Myanmar has lately drawn my attention for reasons closer to my universe: the government lifted the kyat’s 35-year old currency peg and is redrafting foreign investment laws to more completely engage Myanmar with the rest of the world economy.