In a week where the gold price soared to new heights and the rand flexed impressively against the dollar, The Finance Ghost and Moe-Knows have turned their focus to the high-stakes world of emerging markets. But as global indicators flash green, is it as simple as buying the $EEM?
In this episode, Moe breaks down the macro recipe for a sustainable emerging markets rally and why South Africa might be in the sweet spot of a global rotation right now. He warns against ‘betting the farm’ on emerging markets overall, highlighting the wisdom of being highly selective in where you place your capital.
Ghost brings the conversation a little closer to home. He explores whether macro wins filter down to individual companies, with MTN as a great example of how a stock in South Africa can reflect the dollar realities. He also deals with the recent Clicks and Cashbuild performance and the jitters in the South African consumer story.
This week's topics:
- The emerging market rotation: A global investment view on developed vs. emerging markets.
- The three pillars of an emerging market rally: Understanding the essential roles of a softer dollar, easier interest rates, and the electrification-led commodity surge.
- MTN as a currency proxy: A clever way to play frontier market currency shifts through a telecom giant.
- The Clicks and Cashbuild conundrum: Why falling inflation and record Black Friday sales aren't translating into volume growth for SA retailers.
- Yield vs. growth: Why South Africa remains a carry trade destination for bonds, even while the consumer economy faces structural pressure.
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Disclaimer: This podcast is for informational purposes only and does not constitute financial or investment advice. Please speak to your personal financial advisor.
Chapters
- (00:00:00) - Introduction: Psychological Milestones and the Emerging Markets Theme
- (00:01:22) - Timing the Rotation: Why Emerging Markets Are Outperforming the S&P 500
- (00:03:51) - The MTN Strategy: Playing Frontier Currencies Via Telcos
- (00:06:06) - Attributing the Move: Is the Rand at Fair Value?
- (00:10:16) - The Nuance of Valuation: India vs. South Africa
- (00:12:06) - Phases of Rotations: Moving From Price Impact to Flow
- (00:14:45) - What We Can Learn from Clicks and Cashbuild
- (00:19:38) - The Yield-Seeking Destination: South African Bonds vs. Growth Equities
- (00:21:28) - Geopolitics and De-Risking: Why LatAm Has Been Shooting the Lights Out
- (00:22:49) - Conclusion: Diversifying Your Emerging Market Exposure
