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Page 1 Emerging Markets Presentation Devinder Paul Singh, McGill University * * February 21, 2011 Women's Canadian Club of Montreal
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Emerging Markets Presentation
Devinder Paul Singh, McGill University*
*February 21, 2011Women's Canadian Club of
Montreal
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THE REALITY
THE KNOWN IS FINITE (VERY LITTLE)
THE UNKNOWN INFINITE (ALL ELSE)
T.H. HUXLEY, 1887
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PLAN•What is an emerging market• Backgrounder
•Emerging economies•Human capital
•Natural resources•Geopolitics
•Infrastructure•Perceptions and reality •Going Forward
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WHAT IS AN EMERGING MARKET
•Low or middle income economy- ($996 - $3,945)¹
•Low ratio of market capitalization to GDP
•Discriminatory controls for foreign investors
•Transparency, depth, regulation and efficiency
Powerpoint TemplatesPage 6
GDP
BRAZIL CHINA INDIA RUSSIA USA CANADA GERMANY JAPAN0
2
4
6
8
10
12
14
16
Gross Domestic Product (2009)
GDP (PPP) GDP (Offical Exchange rate)
Valu
e (
In T
rillio
ns)
$
Source: The CIA WORLD FACT BOOK (www.cia.gov)
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Size of Economy in terms of GDP
CANADA BRAZIL RUSSIA GERMANY INDIA Japan China USA0
2
4
6
8
10
12
14
16
1.277 2.013 2.11 2.8153.57
4.149
8.748
14.14
Size of Economy (in terms of GDP in trillions $(PPP) (2009)
Size of Economy (in terms of GDP(PPP)
Source: The CIA FACT BOOK
Free Powerpoint TemplatesPage 9
Population (2009)
India China Brazil Russia USA Canada Ger-many
Japan0
200
400
600
800
1,000
1,200
1,400
Population Demographics
Total Population
0-14 Years
15-64 Years
65 Years &over
Countries
Num
ber
of
People
(in
Millions)
Source: The CIA World fact book (www.cia.gov)
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Population (2009) (Contd)
India China Brazil Russia USA Canada Germany Japan0.00
20.00
40.00
60.00
80.00
100.00
63.10
71.70
67.00
71.1067.20
68.7066.00 64.30
65 Years &over15-64 Years0-14 Years
Source: The CIA World fact book (www.cia.gov)
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Labor force (2009)
Source: www.cia.gov
Brazil China India Russia USA Canada Ger-many
Japan0
100
200
300
400
500
600
700
800
900
101.7
813.5
467
75.81
154.2
18.3943.5
66.17
Labor Force
in M
illions
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ENDOWMENT
BRIC25%
Rest of the World75%
Total Land Area
BRIC Rest of the World
Source: The world bank
BRIC32%
Rest of the World68%
Fresh Water
BRIC Rest of the World
Source: www.worldwater.org
Change in natural gas production by country/region: 2007-2030
Note: Based on provisional data for 2007, World Energy Outlook 2008.
Coal Production Outside China
British Petroleum Statistical Review of Energy 2008
GDP and Power Generation
British Petroleum Statistical Review of Energy 2008
Stimulus Components Targeted at Clean Energy
New Energy Finance, 2009
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Government TypeINDIA CHINA BRAZIL RUSSIA USA CANADA GERMANY JAPAN
Parliamentary democracyFederalRepublic
CommunistState-Command Economy
FederalRepublic
Federation-Essentially One Party State
FederalRepublic
Parliamentary democracy/ a federation
FederalRepublic
Parliamentary government with a constitutional monarchy
Source: The CIA World fact book (www.cia.gov)
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ECONOMICS AND POWER POLITICS
POST WWII (1945)• U.S. and USSR AS SUPER POWERS, $• JAPAN AN ECONOMIC POWER• US,USSR,UK,FRANCE ON UNSCPOST COLD WAR • U.S. ONLY SUPER POWER, $• US,USSR,UK,FRANCE,CHINA ON UNSCGOING FORWARD (2025)• U.S. CHINA AS SUPER POWERS, $!• U.S., CHINA, (INDIA!) ECONOMIC POWERS
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Electricity
Brazil China India Russia Canada Germany USA Japan
438.8
3451
723.8925.9
620.7 593.4
4110
957.9
Electricity Production (in billion kWh)
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Communications
0
100
200
300
400
500
600
700
800
Communications (2009)
Telephones (Main lines)
Telephones (Cellular)
Internet Users
In M
illions
Source: The CIA World fact book (www.cia.gov)
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Transport (2009)
BRAZIL CHINA INDIA RUSSIA USA
Airports(With Paved Run-ways)
726 442 249 593 5194
500
1500
2500
3500
4500
5500
Airports(With Paved Runways)
Airports(With Paved Runways)
BRAZIL CHINA INDIA RUSSIA USA
Rail-ways (Km)
28857 77834 64015 87157 226427
25000
75000
125000
175000
225000
Railways (Km)
Kilom
ete
rs
Source: The CIA WORLD FACT BOOK (www.cia.gov)
Powerpoint TemplatesPage 25
Social Media
Power of the People Social Media Tracker (www.umww.com)
Powerpoint TemplatesPage 26
PERCEPTIONS & REALITY
Risk – not in a portfolio
Investability - ETFs
Regulation - Improving
Governance – better than some European
Information – Not a Problem
Returns more than compensate
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Equity Return
Brazil Russia India China US Europe Japan
-200
0
200
400
600
800
1000
Equity return from 2001- 2010 (%)
Equity return from 2001- 2010 (%)
Source : BRICs Monthly Issue May 2010Goldman Sachs global ECS Research
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INDIA-LAND OF CONTRASTS
•Economy booming despite the government
•Swanky Mumbai offices coexist with abject poverty
•More cell phones than toilets
•Tens of thousands of engineering grads- literacy rate
•Infrastructure
Powerpoint TemplatesPage 30
CHINA-DRAGON ALL AROUND
•Economy booming because of government
•Heavy dependence on raw materials imports
•Coastal/Rural divide-Shanghai, Shenzen, West, Tibet
•Domestic bully-citizens have no rights, Foreigners!
•Geo-political bully- Japan, S. Korea, India, Vietnam
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GOING FORWARD
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Demographic outlook for future (India miles ahead among BRIC countries))
Source: Deutsche Bank Research
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Rapid Growth of Indian Economy
Source : Economic Research from theGS Financial Workbench at https://www.gs.com Global Economics paper no 99
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China & India
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World Ranking of BRIC members
Source: Financial times (ft.com/beyondbrics)
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Future belongs to BRIC’s
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CAN YOU IGNORE BRICS!
•One would do so at their own peril
•Highest economic growth rates – China & India
•Large Middle class – China & India
•Raw materials – Brazil and Russia
•Attractive demographics – Brazil & India
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THANK YOU
