Category Archives: Vietnam

Is Asia’s Foreign Exchange NDF Market The Next Domino To Fall?

2013.03.15.ASEAN mapThat’s the basic question I take away from this recent article from the FT’s Jeremy Grant, which uses a wrongful dismissal lawsuit ex-UBS traders are bringing against their former employer as a gateway to discussing price transparency in the Asian non-deliverable FX market.

The important bit doesn’t come until the second half of the article:

“Quite how this “shadow” fixing system has emerged in Singapore, alongside the official rates set by southeast Asian central banks, is a bit of a mystery. Bankers say it was because traders didn’t historically trust the onshore fixing. It is easy to forget the depth of anti-market feeling in Malaysia during the Asian crisis.”

Actually, how it emerged in Singapore was rather straightforward. Continue reading

Caravel Management makes a case for Frontier Markets

You may have heard by now that the jig is up on the BRIC acronym as an investment class. But we’ll all still have to spend at least another couple years discussing how it doesn’t work, so if you’re just getting used to BRIC, fear not, you can still throw that one around and give the appearance of knowing what you’re talking about.

In any event, I have a new investment theme acronym. This is better than CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa), MIST (Mexico, Indonesia, South Korea, Turkey), PIIGS (Portugal, Italy, Ireland, Greece, Spain), CASSH (Canada, Australia, Singapore, Switzerland, Hong Kong) and even SWAG (Silver, Wine, Art, Gold).

Ready? Here it is: VIMBENT.

You heard that here first.

Vietnam
Indonesia
Mexico
Bangladesh
Egypt
Nigeria
Turkey

These, apparently, are the countries New York-based Caravel Management is invested in, according to a Bloomberg interview with portfolio manager Caglar Somek earlier this week:

There’s only so much one can fit into a six-minute segment, so to the credit of both interviewer and interviewee, here’s what seem to be the main ideas behind the VIMBENT strategy:
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Photos of the Day: Cristina Fernández de Kirchner, Weekend Warrior

Surely there’s more to this than meets the eye?

2013.01.30.Kirchner Weekend Warrior 01

Apparently these photos were taken by the official Casa Rosada photographer during a recent trip to Vietnam in which President Cristina Kirchner took a tour of Viet Cong tunnels and foxholes used during the war against the United States.

A picture’s worth a thousand words, right? Well, I can go in about 20 different directions with this…hang on…it’s coming to me…okay I think I’ve got it…ready…set…go:

“No, no, I’m talking about those up there, with the pump action…yes, leave them noisy. That way it scares any pain-in-the-ass innocent bystanders away…”

2013.01.30.Kirchner Weekend Warrior 02

“If I had a peso for every bounced check I’ve signed like this, I’d be about as rich as I am right now…inflation-adjusted, of course…whatever, I’m just happy to not have the most worthless currency in the room for once…”

 2013.01.30.Kirchner Weekend Warrior 03

“Hey guys…so is this the hole you jump down when foreign creditors come to collect their debt repayments?”

2013.01.30.Kirchner Weekend Warrior 04

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Chart of the Day: Frontier Markets Fixed Income Yields

We would be wise remind ourselves first of the definition of the impossible trinity: it is impossible to have (a) a fixed exchange rate, (b) absence of capital controls and (c) an independent monetary policy.

Remember that. I’m going to come back to that.

So Silk Invest has this going on:

“The chart on the right hand side compares currencies in terms of Purchasing Power Parity. What the graph tells us is that the adjusted value of the Brazilian Real is similar to the US$, while most frontier market currencies are systematically undervalued.”

2013.01.23.Frontier Markets yields

The problem I’ve always had with Purchasing Power Parity is that it assumes equivalent standards of living across markets when in fact that is very rarely the case. Put another way, a dollar may buy more in Brazil than in Vietnam, but this says nothing about what the average citizen in either of those countries needs to sustain a living.

But that’s an argument for another time and another context. Otherwise, this is a very compelling chart. A couple things off the top of my head:

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Rapid Growth Markets: Behold THE FUTURE

I’ve just spent way too much time playing with Ernst & Young’s interactive spider graph thingy that allows you to compare their 25 “rapid-growth” markets across a range of macroeconomic indicators. According to E&Y, these 25 countries possess the most promising “long-term potential to generate strong business opportunities.”

So since a picture is worth a thousand words, here’s how all 25 of these economies will change from 2011 to 2016 from the meta-macro view, compared against each other:

Okay! Is everybody ready to go out and make some money?
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9 Emerging and Frontier Markets Uncle Sam wants YOU to export to

On the heels of the latest update to the World Bank’s annual Doing Business index, I thought I would use this opportunity to try a different take on the usual blather surrounding this study about which country did or didn’t move up five spaces in the shareholders’ rights category.

I recently happened to attend a function sponsored by the US Export-Import Bank that was part of its Global Access for Small Business Initiative. In the interest of not getting bogged down here by too much bureaucratese, the nutshell of this initiative can be summed up as such:

“Increasing exports and access to foreign markets is a proven tool for strengthening our economy and creating durable jobs. The United States is well positioned to capitalize on the types of products and services that fast-growing markets around the world are demanding. Ex-Im Bank is committed to ensuring that American small businesses can compete in this global climate.”

For those not in the habit of tuning in to this sort of thing, this initiative basically is targeting American small businesses looking to export to emerging and frontier markets. At first glance, this isn’t too far off from what the Overseas Private Investment Corporation (OPIC) does, but the focus here is less about investing overseas and more on businesses looking to export overseas. Where exactly overseas? Officially, anywhere, but Ex-Im representatives made a point of letting the audience know that those looking to export to the following nine countries would receive special attention, determined by “a variety of macroeconomic indicators”:
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Leopard Capital discusses Frontier Markets as a safe haven

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?
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Mexico, the new Brazil, when it was the new China, before Africa and Switzerland showed up

According to the Financial Times, in perversion of all perversions, we’re now supposed to believe that Switzerland is the new China. Got that?

“Switzerland is the new incipient China,” said Steven Englander, Citigroup’s head of foreign exchange strategy.

Apparently, Switzerland’s attempts to keep the franc artificially weak while building up its central bank reserves make it so.

Well gee. Not too long ago, Brazil was supposed to be the new China:

That is, until Australia was dubbed the new China, at least as far as General Electric is concerned:

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Frontier Markets Due Diligence, Round Two

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:

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Vietnam real estate coming back

There’s clearly a lot more to say about this sector, but for the moment I’m just putting up some quick numbers to have it on file here. From Vietnam News:

The State-owned Bank for Investment and Development of Viet Nam has already earmarked loans worth VND4 trillion (US$192.13 million) at 16 per cent per year interest to individuals and households buying housing in projects it funds. Continue reading

The Case for Frontier Market Investing

I don’t need any convincing but once in a while it’s a good exercise to review why we think what we think. And if I were in a position of having to convince higher powers to increase a fund’s portfolio allocation in frontier markets, the following is a pretty good list for making the case, culled from Robert Hallberg’s column earlier this week in Seeking Alpha, and the most recent research report from Clear Path Analysis on investing in emerging markets currencies and debt, much of which also applies to frontier markets.

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