U.S. Global Investors Searching for Opportunities, Managing Risk

Transcription

1 U.S. Global Investors Searching for Opportunities, Managing Risk The Divergent Performance of the Emerging Markets Jack Dzierwa Global Strategist US.FUNDS September

2 Disappointing Year-to-Date Performance of BRICs BRICs = Brazil, Russia, India, China 2

3 But There Were Opportunities Elsewhere 3

4 The Six Drivers of Emerging Markets 4

5 Growth Opportunities in Emerging Countries 5

6 Sovereign Debt: Emerging Markets Advantage 6

7 Eastern Europe 7

8 Eastern Europe: Higher GDP per Capita among the Developing Countries PPP=Purchasing Power Parity 8

9 Eastern Europe: Conservative Fiscal Policy and Low Debt Enables Higher Growth 9

10 Central and Eastern Europe Snapshot 10

11 European Union Shares of 2009 European Union GDP (%) 11

12 Fiscal Position Western Europe vs. Emerging Europe 12

13 European Union Criteria Fulfillment in Emerging Europe 13

14 Russia: GDP Growth Averaged 7% 14

15 Russia: Foreign Exchange Reserves 15

16 Russia: Infrastructure Spending Russian State $900bn investment program 16

17 Banking Penetration in Central and Eastern Europe BRE bank in Warsaw, Poland 17

18 Loans-to-GDP Western Europe vs. Emerging Europe 18

19 Turkey: Main Driver of Domestic Demand is Demographics Turkey Population : ~ 73 million Population growth rate : ~ 1.5% Population under age 28: 50% Population under age 15 : 28% Number of households : 17.6 million New household formation: 2.5% Number of marriages: ~ 650,000 19

20 Turkey: Change to a Low Inflationary Environment Opens an Opportunity Traffic in Istanbul, Turkey 20

21 Turkey: Consumers are Not Very Leveraged, and Bank Loan-to-Deposit Ratios are High ATM in Turkey 21

22 China Buys The World Each circle represents a Chinese acquisition in a specific sector (see legend). The larger the circle, the larger the amount of the transaction in terms of dollars. The location of the circle on the map represents the country of origin for the acquisition. Source: Forbes.com, Heritage Foundation 22

23 China s Global Economic Share PPP = Purchasing Power Parity 23

24 Luxury Demand Across China Cartier Store in Shanghai Source: Getty 24

25 China Total Fixed Asset Investment Beijing, China 25

26 China Rural to Urban Migration 26

27 China Goes Nuclear CANDU Nuclear Power Plant at Qinshan, China CAGR= Compounded Annual Growth Rate 27

28 China Auto Sales Traffic in Chengdu, China 28

29 Car Penetration to Disposable Income Chinese Car Lot 29

30 China Savings Rate 30

31 Government s Health Spending is Relatively Low 31

32 Come Visit Us at Facebook: Twitter: Frank Talk: Investor Alert: 32

33 Disclosures All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. The Consumer Price Index (CPI) is one of the most widely recognized price measures for tracking the price of a market basket of goods and services purchased by individuals. The weights of components are based on consumer spending patterns. The MSCI Emerging Markets Europe Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the emerging markets countries of Europe (Czech Republic, Hungary, Poland, Russia, and Turkey). R-squared is a statistical measure that represents the percentage of a fund or security's movements that can be explained by movements in a benchmark index. R-squared values range from 0 to 100. An R-squared of 100 means that all movements of a security are completely explained by movements in the index. Advanced G-20 economies references members of the G-20 whose economies are considered by the IMF to be developed. This includes Canada, United States, Austria, Belgium, France, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom, Australia, Japan and Korea. Emerging G-20 economies references members of the G-20 whose economies are considered by the IMF to be emerging. This includes Brazil, India, Indonesia, Hungary, Russia and Saudi Arabia. The Bovespa Index (IBOV) is a total return index weighted by traded volume and is comprised of the most liquid stocks traded on the Sao Paulo Stock Exchange. The Hang Seng China Enterprises Index is a capitalization-weighted index comprised of state-owned Chinese companies (H-Shares) listed on the Hong Kong Stock Exchange and included in HSMLCI index (Hang Seng Mainland Composite Index). The MICEX Index is the real-time cap-weighted Russian composite index. It comprises 30 most liquid stocks of Russian largest and most developed companies from 10 main economy sectors. The MICEX Index was launched on September 22, 1997, base value 100. The MICEX Index is calculated and disseminated by the MICEX Stock Exchange, the main Russian stock exchange. The IGBC Index from the Columbia Stock Exchange, also known as the General Index, is a capitalization-weighted index of the liquid and highest capitalized stocks traded on the Columbia Stock Exchange. The Bombay Stock Exchange Sensitive Index (Sensex) is a cap-weighted index. The selection of the index members has been made on the basis of liquidity, depth, and floating-stock-adjustment depth and industry representation. Sensex has a base date and value of 100 on The index uses free float. The IPSA Index is a Total Return Index and is composed of the 40 stocks with the highest average annual trading volume in the Santiago Stock Exchange (Bolsa de Comercia de Santiago, Chile). The following securities mentioned in the presentation were held by one or more of U.S. Global Investors family of funds as of 06/30/10: Turkiye Garanti Bankasi. 33