by Mawer Investment Management
From our latest Investment Newsletter...
It is 34 degrees outside and I am stuck in the middle of a traffic jam. My driver has turned off the engine of our white Honda Accord and we now sit unmoving in the middle of a huge freeway. On my left, billboards advertise popular Asian brands and clutter a skyline already replete with skyscrapers. On my right, a huge golden poster celebrates King Bhumibol Adulyadej, the reigning monarch. Stranded in this way, I can’t help but notice the unusual juxtaposition that is this city: frenetic and straddling two very different worlds, with temples and Kings on the one hand, and skyscrapers and tuk tuks on the other. But then I also notice that I have been in traffic for over an hour. And I am going to be late. Again.
This is Bangkok, Thailand. An emerging market.
There is a view widely held in investment circles that the world is converging. This premise – that developing economies will eventually converge on their developed counterparts – appears more and more to be the market’s current operating paradigm. And whether one subscribes to this belief or not, there is ample evidence that many are making this bet. In international airports, HSBC ads foretell that of the 30 largest economies in 2050, 19 will be in countries we now call ‘emerging.’ Large European and American corporations are investing heavily into developing markets in anticipation of a burgeoning middle-class and stronger growth. Even U.S. regional bank Wells Fargo has announced its intention to open up retail bank branches in China.
A major driver of this view is the belief in the development of Southeast Asia. While most people in North America are familiar with the China growth theme, China’s southern and eastern neighbours also promise significant growth opportunities. Fueled by the economic power of China, and a rising tide of incomes across the region, ASEAN economies have now joined China on the economic centre stage. Foreign capital and companies are investing there; local companies talk excitedly about their prospects. Increasingly, how the world will evolve over the next 30 years is synonymous with how the ASEAN region will develop. Markets are intrigued...
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