8 Comments

Great as always Professor! Thank you!

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As clarifiaction, where are you getting the information that Chinese equities are trading at high PEs compared to global markets?

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Excellent. Thank you!

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Very complete list. Unfortunately, written methods by westerners for westerners. Recently, country risk has increased enormously in the west. I have seen many people burned by special taxes randomly placed on UK equities, or mandatory take over by a government in France, or a company banned from acquiring customers in the USA, while at the same time achieved some great returns in EMs. It is true that I also saw People lose some money in Chinese education stocks due to a regulation change.

This is just ethnocentrism based rules and lists, with some truth in some rankings like democracy index or freedom of the press. Unfortunately, good returns can be achieved in low democracy index countries as business goes on a usual. The recent authoritarianism in the west and control of freedoms reshuffles the cards that were true before the 2010s.

" make sure that your growth rates reflect inflation in the Euro zone, but that you risk premiums and real growth reflect its Russian operations."

On currency, this is incorrect, as it is making a prediction and a speculation on future currency movements. As an fundamental investor, we cannot predict this accurately.

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The climate change fanaticism in the West makes everything uncertain e.g. look what they are trying to do to the Dutch farmers and I worry my family will be next in the USA as they are already demonising almond farmers in social media and media article comments. CHECK OUT:

Emerging Market Country Selection in a Multipolar World: Twelve Things to Consider

- Globalization, sovereignty, oil+gas, alt energy, water, industrial minerals, gold+silver (real money), "real" vs. "fake" economy, agriculture, intellectual capital, demographics & climate fanaticism.

https://emergingmarketskeptic.substack.com/p/em-country-selection-multipolar-world

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things are getting more authoritharian in DMs and fast. Economic and personal freedoms including freedom of speech are collapsing. This is not yet reflected in the democracy indexes and equity risks premiums but it's coming soon.

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I will include links to your post + paper + video in my links collection post "Emerging Market Links + The Week Ahead (August 31, 2023)" for today. CHECK OUT:

Emerging Market Country Selection in a Multipolar World: Twelve Things to Consider

- Globalization, sovereignty, oil+gas, alt energy, water, industrial minerals, gold+silver (real money), "real" vs. "fake" economy, agriculture, intellectual capital, demographics & climate fanaticism.

https://emergingmarketskeptic.substack.com/p/em-country-selection-multipolar-world

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Very insightful! How one would apply the Country's ERPs to find the cost of equity for a company in a specific country? Simply "MATURE MARKET RISK FREE RATE + COUNTRY's ERP"? And how to account for the (levered) BETA of a specific industry? (1) Multiply the COUNTRY ERP by BETA or (2) the MATURE ERP by BETA, and then add the COUNTRY RISK PREMIUM?

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