Southeast Asia – unfairly overlooked?

Southeast Asia doesn’t get the same amount of attention as China and India, probably because it doesn’t have a single economy that can compare with those two in terms of scale. But if efforts for greater regional cooperation come together over the next few years, it make for a very substantial market and one that investors shouldn’t ignore.

This week’s article for MoneyWeek Asia reviews some of Southeast Asia’s selling points and looks at an interesting start-up fund specialising in the area.


India and Taiwan

Two pieces for MoneyWeek this week, both on markets that have been very much out of favour over the past year.

The cover story looks at India’s recent problems, many of which are long-standing issues that foreign investors should know but often overlook.  One reason why the Indian market performed in 2011 was the huge flow of foreign investment in 2010 (a net US$29bn) amid unreasonably high expectations – when those expectations collided with reality ,there was nothing to support it at a time when the macro outlook was weak and the central bank was tightening.But given how far stocks have come down, 2012 might prove to be a good year to invest, although an immediate turnaround is unlikely.

I wish I could say the same for Taiwan. The result of today’s elections has been far more decisive than I expected when I wrote about it on Friday and we may well see a relief rally next week. But the outlook for the crucial tech sector (more than 50% of the Taiwanese market) in 2012 is not good. This is an economy where I’ve long expected a structural turnaround, but it clearly isn’t here yet.

Decoupling revisited

One of the most frustrating aspects of emerging market investing over the last year is the gap between the outperformance of their economies and the underperformance of most stockmarkets. This article takes a look at two different angles on “decoupling” and asks an investment question that concerns me a great deal: Could emerging markets be the place to be economically over the next decade, yet still get outshone by US Treasuries in investment terms?

I mentioned in passing that the S&P500, while probably overvalued,may not be quite as overvalued as the cyclically adjusted price/earnings ratio and equity q suggest. To expand on that, here’s a lengthy blog post on potential problems with equity q and CAPE.


A year in review – bad investment decisions in 2011

The last year has been an especially tricky one in investment terms, but even so I was surprised to see quite how oddly things panned out.

As discussed in the final MoneyWeek Asia email of 2011, I got one macro call right – the inflation threat seems to be fading fast in most emerging markets, but it didn’t help my investment thinking much. The year’s top performers were an odd split between safe havens (government bonds) and, surprisingly, risky assets that promised growth (countries such as Indonesia). Anything in between got squashed.