This efficient, positive guide for the practical observer and investor shows how to choose healthy emerging markets.
After the 2008 global financial crisis, impermanence is the watchword, writes Sharma (Breakout Nations: In Pursuit of the Next Economic Miracles, 2012), the head of emerging markets and global macro at Morgan Stanley Investment Management. Since no one seemed to have been able to predict the 2008 meltdown, and the most-hyped emerging nations of Brazil, Russia, India, and China (BRIC) have now fallen into being considered a “bloody ridiculous investment concept,” the author urges the use of skepticism, short-term planning (five or six years), and reliable data in trying to grasp forces of change. His “rules,” developed over “25 years on the road” with a team of researchers, encompass the factors of growth in some “fifty-six postwar emerging economies that managed to sustain a growth rate of 6 percent for at least a decade.” In each chapter, rather than moving country by country, Sharma tackles one of these factors. He looks at demographic data in order to get a sense of the makeup of the available workforce (falling birthrates are prompting countries to add incentives for having babies, such as in Singapore, France, and Chile, along with increasing the retirement age and attracting migrants), and he considers whether a new political leader will be able to enact reforms (e.g., Brazil’s Lula da Silva), investigates areas of income inequality (e.g., billionaires in India), and examines state spending and how to make the most of a country’s “geographic sweet spot” (e.g., Korea, Taiwan, Vietnam). Sharma discusses investment in factories, the measurement of food prices, and the importance of ignoring the “hype watch” and of keeping an eye on the locals to determine when a country is in crisis or recovery. The final chapter is a rather bold assertion of which countries might be considered “the good, the average, and the ugly.”
Evenhanded, measured, sage advice on the global economy.