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Speaker 1: Welcome on Trillions. I'm Joel Weber and I'm Eric Bells. Eric.

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Speaker 1: Next week in Singapore, Bloomberg is hosting something called the

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Speaker 1: New Economy Forum, and the idea with this form is

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Speaker 1: that it's going to be dedicated to talking about emerging

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Speaker 1: economies around the world, which largely come from Amia and

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Speaker 1: South America, Latin America, Africa. And so I wanted to

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Speaker 1: take this episode of Trillions to sort of talk about

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Speaker 1: um an investing lens that's different than one that we

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Speaker 1: usually talked about because we haven't done this on the

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Speaker 1: show yet, talking about countries outside of the developed world, right, Yeah,

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Speaker 1: So this would be emerging markets and then frontier countries,

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Speaker 1: which is sort of like the there's actually like official classifications. Yes,

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Speaker 1: that's right, and and some get promoted. Uh, you know,

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Speaker 1: it does remind me of you know, freshman year, j

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Speaker 1: V and varsity in terms of the way it took

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Speaker 1: a three pronged system. But in the immerge, NG and

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Speaker 1: frontier areas there's a lot of opportunity, there's a lot

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Speaker 1: more volatility. Just to put some numbers on this. In

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Speaker 1: the e t F world, emerging markets e t F

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Speaker 1: s as a whole, like when you invest in the

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Speaker 1: whole region at once, have a hundred and seventy four billion,

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Speaker 1: that's a lot. That's six of all e t F assets.

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Speaker 1: But the countries when you go into a specific country

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Speaker 1: and emerging markets, those e t f s only have

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Speaker 1: forty one billions, So that's just over one percent of

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Speaker 1: the assets. And most people who do who use those

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Speaker 1: are traders. But I mean, mom and pop, if you

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Speaker 1: are very interested in a country, uh that's you know,

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Speaker 1: way out there, way developing. E t F serve up

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Speaker 1: almost all of them at this point that are investable,

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Speaker 1: from Vietnam to Argentina to Egypt. Um, there's just one

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Speaker 1: for Pakistan. Uh you can now and and back in

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Speaker 1: the day, this was very difficult to get local shares

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Speaker 1: of these countries. You needed to know people. Now you

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Speaker 1: can just buy it, like buying shares of Microsoft. So

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Speaker 1: when we sometimes talk about et F sort of democratizing investing,

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Speaker 1: this is a great example. Now anybody can get these countries.

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Speaker 1: They're literally delivered to your doorstep. Um, and that's one

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Speaker 1: of the reasons they're fairly popular and growing. Speaking of

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Speaker 1: growing the population of these countries that we're talking about,

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Speaker 1: when you look at um I m F numbers for them.

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Speaker 1: If you take emerging and developing and put them all together.

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Speaker 1: We're talking about of the world's population. So this could

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Speaker 1: be I mean, when you really step back and think

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Speaker 1: about it's like the long term growth plate because there's

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Speaker 1: so much potential in these economies. Yeah, and the US

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Speaker 1: market is by a market cap is so dominant in

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Speaker 1: disproportioned to the number of people we have. So you're

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Speaker 1: right there, there's a bit of an imbalance in terms

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Speaker 1: of the size of our star stock market and the

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Speaker 1: number of people and the growth potential over there. Although

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Speaker 1: I will say and I hope we bring this up

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Speaker 1: in the discussion, um there. Look, there are many times

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Speaker 1: when a country has a good story written about it,

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Speaker 1: it looks like there's a lot of growth, the pe

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Speaker 1: is low and it just doesn't go up. In fact,

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Speaker 1: they could go down worse, and so there is a

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Speaker 1: lot of risk. Can't wait to talk about that, and

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Speaker 1: so for this discussion, because yours truly knows the t

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Speaker 1: s very well, but I don't know every single country

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Speaker 1: out there. In fact, sometimes I have to scramble. It's

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Speaker 1: like doing a book report of talk about Vietnam today Okay,

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Speaker 1: I gotta look at Wikipedia and do my homework. But

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Speaker 1: rather than me doing that, we brought in a couple

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Speaker 1: of experts from Van Eck who are specialists in these

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Speaker 1: countries and do nothing but look at them all day.

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Speaker 1: And if you want to learn more about the New

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Speaker 1: Economy Forum, there's a great new podcast. You've heard it

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Speaker 1: teased in our feed before. The host is Stephanie Flanders

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Speaker 1: and the name of the show is The New Economy

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Speaker 1: This week Countrilliance all around the World and e t s.

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Speaker 1: We have a couple of guests, Ola, Patricia, Welcome to

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Speaker 1: the show. Hi guys, y, Yes, thank you for having us.

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Speaker 1: So you guys are at van Neck, Can you describe

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Speaker 1: what you do there? Sure? Um, I'm all I'm at

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Speaker 1: one of the senior analysts on the Emerging Markets Equity

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Speaker 1: fund at Vanack, more on the active side than the ETF,

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Speaker 1: but happy to be here and talk about the countries

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Speaker 1: I look at. And Patricia, Yes, I'm Patricia Gonzales. I'm

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Speaker 1: also a senior analyst Advanik and focusing more on Latin

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Speaker 1: America and a couple of countries in Asia, and I'm

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Speaker 1: very happy to be here. And you know, they are

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Speaker 1: from the active side. You hear that, So a lot

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Speaker 1: of these shops have both e T s and active

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Speaker 1: mutual funds and so, uh, lunch lunch is really interesting.

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Speaker 1: I'm sure there's some tension you can cut with a

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Speaker 1: knife now, I'm just kidding. Um. The reason that we

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Speaker 1: would get somebody from active side is the E T

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Speaker 1: F product specialists are just not going to know as

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Speaker 1: much because they're out there looking for individual stocks in

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Speaker 1: these areas. So they're the perfect people for this. Even

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Speaker 1: though we tend to normally have et F people on

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Speaker 1: um they work need work and et F company though,

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Speaker 1: so you're kind of into it a little bit. But yeah, okay, UM,

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Speaker 1: so how do you guys look at the difference between

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Speaker 1: frontier and emerging markets? Because that's sort of frontier is

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Speaker 1: more j V and then you get promoted to or

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Speaker 1: I guess frontiers frontiers spread shman emerging markets. So how

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Speaker 1: do you guys look at it through your investing went? Yeah,

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Speaker 1: I mean I would say that the classification that most

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Speaker 1: people follow tends to be from the index classification by

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Speaker 1: ms c I. But as far as we're concerned, we

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Speaker 1: really are looking for countries that offer longer term development

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Speaker 1: and growth opportunities. Whether it's on the the you know,

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Speaker 1: emerging side, whether it's on the frontier side, we kind

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Speaker 1: of don't really care as much. UM. Frontier markets tend

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Speaker 1: to have less experience with foreign institutional investors. UH, some

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Speaker 1: of the liquid you know, liquidity, and some of those

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Speaker 1: markets can be more challenging. UH. Some of the capital

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Speaker 1: market laws are still being developed, so they tend to

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Speaker 1: be a bit earlier stage, let's say, in their cycle

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Speaker 1: of development. So we're always mindful of that when we

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Speaker 1: do our analysis and due diligence on companies and UM

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Speaker 1: and countries. But I think we're looking for opportunity and

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Speaker 1: we can find that. I mean, there are shared characteristics

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Speaker 1: between both in terms of UM typically having larger populations,

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Speaker 1: younger populations, so a lot of runway for growth going forward. Yes,

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Speaker 1: I agree with with all that. Mean in a particular case,

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Speaker 1: we look at either emerging or frontier UH, and the

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Speaker 1: main characteristic, like she says, a lot of the frontier

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Speaker 1: market UM like the liquidity steel and they have a

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Speaker 1: capital market that is not very developed. But certainly, like

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Speaker 1: you said, there are still very good opportunities to demographic

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Speaker 1: is there so UM there's a lot of opportunities in both.

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Speaker 1: So with that said, obviously you're just looking for countries

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Speaker 1: a lot of growth. Let's just jump in and talk

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Speaker 1: about Brazil. An interesting one, an interesting one. This is

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Speaker 1: sort of the like I said, the soccer ball is

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Speaker 1: always landing on one of these countries at some point,

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Speaker 1: and right now it's on Brazil because there's an election

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Speaker 1: and as I tell people, Single Country Emerging Market TTFS

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Speaker 1: like nothing better than a pro business conservative leader elected.

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Speaker 1: Is that right? So walk us through what happened. Because

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Speaker 1: e w Z, which tracks Brazil is up twenty in October.

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Speaker 1: You know how bloody and brutal October was for everybody else,

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Speaker 1: So that's how much that they really liked this election.

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Speaker 1: And this election was was a little controversial. Civilly had

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Speaker 1: a lot of attention, that's correct. Well, yeah, like you

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Speaker 1: said last Sunday, they had the presidential elections and Jabel Sonado,

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Speaker 1: who was a former army captain and a congressman one

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Speaker 1: at the election. The other candidate was Fernando had that

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Speaker 1: with was part of the Workers Party more on the left,

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Speaker 1: that was the party of former president Silva. So definitely

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Speaker 1: also NATO the more market friendly of the two uh

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Speaker 1: and and his victory was already anticipated by the market

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Speaker 1: and that's one of the main reasons what we had saw,

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Speaker 1: you know, a very good rally on the equity side

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Speaker 1: over the last month and the expectation that he's going

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Speaker 1: to be very you know, market friendly. I mean, um,

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Speaker 1: the most important thing for him to do is really

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Speaker 1: attack on the fiscal side as some main issue for Brazil.

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Speaker 1: The fiscal deficity is really one of the largest in

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Speaker 1: emerging market. But he said the right things and I

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Speaker 1: think that's one of the main focus of his new government.

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Speaker 1: So if that's the case, I mean, we can really

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Speaker 1: see Brasilia accelerating GDP growth and in a positive environment

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Speaker 1: going forward. And in the case of something like a leader,

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Speaker 1: is that worth I mean, since the election, it's kind

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Speaker 1: of gone flat. So people were buying the rumors so

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Speaker 1: to speak. Um, but is is that over bought? In

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Speaker 1: other words, when you're looking to play a single country

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Speaker 1: like this, should you, um, you know, buy in after

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Speaker 1: a rally like that or do you think the fundamental

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Speaker 1: value of the stocks that you analyze are not really

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Speaker 1: tied up to the pricing. Now that there was this

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Speaker 1: sort of like top down buying because of an election. Well,

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Speaker 1: I think the fundamentals of the companies are there, and

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Speaker 1: I do believe there's still more opportunity. A lot of

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Speaker 1: people are comparing Brazil would happened to Indian two thousand

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Speaker 1: fourteen when Moody was elected president and the equity market

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Speaker 1: had a really you know, big rally and the expectations

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Speaker 1: of UH of economic growth and reforms. So I I

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Speaker 1: do think that if the president do the right things,

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Speaker 1: in particular on the fiscal side, UH, there's a lot

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Speaker 1: of opportunities for Brazil going forward in terms of growth

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Speaker 1: UM the conditions are already good there. I mean you

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Speaker 1: see that in terms rates are low, you see low inflation,

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Speaker 1: and you have seen some pickup in economic um UH

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Speaker 1: numbers and also on labor market. So I do believe

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Speaker 1: that under the right circumstances, with the right economic cabinet

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Speaker 1: and with the right reforms, I really see Brazil I

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Speaker 1: can really continue rerating and influence continue to come to

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Speaker 1: the country. So with something like Brazil and at the neck,

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Speaker 1: how do you guys try and get exposure if you

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Speaker 1: if you like what you see, if you like those conditions. Yeah,

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Speaker 1: on our particular case, we are we are very bottom up.

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Speaker 1: Like we alla mentioned, we're on the active side. Uh

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Speaker 1: So for us, it's very important to find companies when

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Speaker 1: we we will see visible and structural and growth in profitability.

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Speaker 1: And we continue to see that in many sectors within

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Speaker 1: Brazil and education sector, healthcare sector, um and and like

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Speaker 1: and like a beilieve evaluations are are still very reasonable.

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Speaker 1: Uh So we we continue to find very good opportunities there.

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Speaker 1: And if you look at Verdeck, I know you guys

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Speaker 1: are on the active side, but Vanneck has a Brazil

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Speaker 1: e t F. It's a small cap one the tickers

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Speaker 1: b RF and I do find after when these elections

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Speaker 1: are happening and they're sort of positive for the market,

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Speaker 1: the small cap will zip up a little faster. Do

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Speaker 1: you go and look at small caps too, because the big,

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Speaker 1: the big single country e m ets tend to be

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Speaker 1: dominated by the bank's financials and you've got to go

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Speaker 1: down to the small caps to get a more broader

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Speaker 1: swath of the economy. Is that right? Is that correct?

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Speaker 1: Because usually, um, you know, the small cap are the

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Speaker 1: ones that represent a lot of the smallest sector. I mean,

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Speaker 1: like you said, the majority of the or the companies

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Speaker 1: that have the largest way on the index, normally the banks,

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Speaker 1: but also like Petro Brass or the ballast and and

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Speaker 1: we've really find the opportunities are in in some of

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Speaker 1: these small caps and like a small healthcare companies that

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Speaker 1: are taking opportunity of of of the market, and or

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Speaker 1: education companies like like I mentioned in the past. So

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Speaker 1: I I do believe that a lot of the opportunities,

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Speaker 1: specifically domestic opportunities are within the small caps. Although you

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Speaker 1: definitely have to take something before you buy this because

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Speaker 1: these things are volatile. Both the b Z and b

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Speaker 1: RF are three or four times of altility of the

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Speaker 1: smp FISMA. Is that what you take before you Yeah,

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Speaker 1: you can get something over the counter. You don't have

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Speaker 1: to go that you don't have to go you don't

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Speaker 1: have to go on the streets for this. I mean

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Speaker 1: it's not like bitcoin or vex, tivix or anything. Okay,

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Speaker 1: but yeah, there's definitely a lot of about the stomach

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Speaker 1: this vulatility. That's the downside, that's the that's the the

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Speaker 1: cost to potentially get in the benefit from this, right,

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Speaker 1: that's correct. Yeah, Well, the issues sometimes with some of

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Speaker 1: these smaller caps of liquidity so that's why if you

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Speaker 1: want to build a position or exit a position um

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Speaker 1: with the lower liquidity, that trands to create more volatility.

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Speaker 1: But like Petree you mentioned, if you are investing in

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Speaker 1: emerging markets and you know, as we talked about, with

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Speaker 1: favorable demographics, you want to get exposure to some of

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Speaker 1: these more domestic themes because even though they're smaller companies,

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Speaker 1: they tend to probably offer better valuations and higher growth

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Speaker 1: over time UM and they tend to be less correlated

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Speaker 1: with global events. So if you take Petrow Brass, that's

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Speaker 1: really moving much more with the you know, global commodity

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Speaker 1: cycle rather than with the fundamentals of Brazil domestically. So

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Speaker 1: I mean that's why we we tend to find more

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Speaker 1: interesting ideas and also less um covered some more unique,

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Speaker 1: adducing cractic ideas in the smaller and medium cap space.

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Speaker 1: How long will you hold a position in someplace like

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Speaker 1: this where there is this much volatility, you see that

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Speaker 1: there's opportunity, How long will you bury in the hold

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Speaker 1: on the something that you believe in? Oh, I mean

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Speaker 1: we're long term investors, and when their structure growth and

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Speaker 1: and especially like the small cap that are in in

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Speaker 1: in sectors that are more domestic. Um. You know, usually

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Speaker 1: they're UM. Irrespective of what is happening in the country,

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Speaker 1: we continue to see a very good growth. So you know,

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Speaker 1: if the fundamentals of the companies are there and we

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Speaker 1: continue to see that, definitely we were long term investor,

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Speaker 1: unless unless the story change and you know, then that's

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Speaker 1: a different situation. But and when you see long term,

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Speaker 1: what's that horizon look like for you? It can be

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Speaker 1: up to a one three years or definitely well, you

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Speaker 1: know Gunlock said by India and don't look at your

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Speaker 1: statement for thirty years, So there's there's a long long

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Speaker 1: term Definitely, that's definitely a way to deal with the

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Speaker 1: votility because you just don't look at it. Um. But

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Speaker 1: you have to really commit to the country. In your case,

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Speaker 1: you're you're one to three years long term for you. UM.

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Speaker 1: And in the case of Brazil, did the election confirm

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Speaker 1: what you already knew or did it actually like make

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Speaker 1: you buy a little more of the country. Oh well,

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Speaker 1: definitely were more positive um than now. We gotta oppress

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Speaker 1: then and it's more market friendly. There are still uncertainties

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Speaker 1: because I mean his his brand new he's somebody that

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Speaker 1: is rather a way to the right, so we don't

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Speaker 1: that's right. This is like the farthest right has done

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Speaker 1: is a former military So we don't know what really

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Speaker 1: can happen. We have good expectations and we're waiting to

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Speaker 1: see what kind of cabinets he will have and you know,

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Speaker 1: what are the kind of policies that he would put

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Speaker 1: in place. But definitely so Brazil is not the only

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Speaker 1: country in South America. We talk about the rest of

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Speaker 1: the gun. Yeah, another interesting country. I think we can

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Speaker 1: we can talk about it. They also have a very

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Speaker 1: interesting but it's a small country. A lot of people

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Speaker 1: don't look at it. Uh, it's a small part of

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Speaker 1: the m c I and this part is a very

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Speaker 1: interesting country. Is the fastest growing, one of the fastest

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Speaker 1: growing in the region. It's actually a really interesting one

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Speaker 1: in relation to the ms c I index because it

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Speaker 1: didn't get down, like the percentage dedicated to the index

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Speaker 1: in Peru shrunk traumatical well, because they didn't have enough.

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Speaker 1: The liquidity that the market cap is is not that big.

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Speaker 1: It's not that big, that's correct. I mean the largest

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Speaker 1: constituent is a credit card, which is the largest bank there.

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Speaker 1: And the you have another couple of company, who is

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Speaker 1: this Southern copper and when I went to but yeah,

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Speaker 1: definitely there's not a lot of name within the you know,

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Speaker 1: the whole basketball metaphor with freshman to JV to varsity.

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Speaker 1: Sometimes a country can be a big deal on the

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Speaker 1: freshman team and then when it gets promoted, it's like

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Speaker 1: ninth man on JV. And that is Peru. It's only

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Speaker 1: point four four percent in the MSc Emerging Markets. Israel

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Speaker 1: is a good example that dominated the emerging markets, not dominated,

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Speaker 1: but it had a good waiting and it's basically lost

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Speaker 1: now in the developed world. Um, but what's interesting is EPU,

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Speaker 1: which is the I shares Peru ETF listen to returns

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Speaker 1: on this it's up six in three years. The SMP

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Speaker 1: is up thirty six, and the Emerging Markets Index as

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Speaker 1: a hole's up six. So Peru s and yeah and

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Speaker 1: tripled its own index. So in these cases you kind

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Speaker 1: of have to use a single country, right if you

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Speaker 1: want to get exposure. And why is it up that much?

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Speaker 1: What's going on? When we look at Peru, it's a

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Speaker 1: country that depends a lot of metal prices for their growth,

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Speaker 1: and I mean you can see that their second largest

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Speaker 1: producer of copper, silver, the third largest producer of sink.

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Speaker 1: They also produced gold. So, I mean metal prices has

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Speaker 1: been in a very good recovery and that have really

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Speaker 1: helped their GDP on the growth. And when we look

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Speaker 1: at at the index, a lot of the companies are

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Speaker 1: commodity companies UM, so definitely they have had a good performance.

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Speaker 1: So if PREW has been a bright spot, and especially

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Speaker 1: bright spot, what's been not so bright Well that's the

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Speaker 1: case of Argentina. Argentina is a completely different case. Actually,

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Speaker 1: back in June, the m S A I in this

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Speaker 1: UM included Argentina, which was a big deal. It was

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Speaker 1: a big deal. It was a big deal, but unfortunately

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Speaker 1: it came during a time of a lot of volatility

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Speaker 1: for for for Argentina. You know, the changes that they

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Speaker 1: were happening global and domestically really made Argentina in a

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Speaker 1: very vulnumber of state. I mean it's a country with

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Speaker 1: a high twin deficits and you know, like tier global liquidity,

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Speaker 1: they had a drought, all the things, you know, created

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Speaker 1: the perfect storm for them at the same time that

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Speaker 1: they were being upgraded or graduating for you know, to

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Speaker 1: to the emerging market. This thing is down thirty this year,

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Speaker 1: which is the year it got promoted, right, Yeah, that's correct. Well,

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Speaker 1: they they announced that they will be promoted, so yeah,

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Speaker 1: usually it takes like six six months when with the

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Speaker 1: announcement back in June May June this year, Yeah, it

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00:17:18,160 --> 00:17:21,480
Speaker 1: didn't really do much. This this is and that's you know,

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Speaker 1: this is why some people do try to play that

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Speaker 1: promotion because they're anticipating all this foreign capital coming in.

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Speaker 1: But it doesn't always work. There are macro issues that

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Speaker 1: which can trump that game. And if there's one place

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Speaker 1: that foreign capital has reservations about, it tends to be

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Speaker 1: a Yeah, there has been a rollercoaster Argentina over the years.

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Speaker 1: So as an investor, who can you know, look at

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Speaker 1: a continent like this and see that Brazil has this

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Speaker 1: long term opportunity, Peru's having out performance, Argentina's um not

347
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Speaker 1: not doing as well as as you might want. How

348
00:17:53,560 --> 00:17:57,720
Speaker 1: do you put put your thesis together based on those factors? Well,

349
00:17:57,840 --> 00:18:01,920
Speaker 1: definitely there there's more postive macro news in like in

350
00:18:02,000 --> 00:18:04,240
Speaker 1: Peru and Brazil. But in the case of Argentina, I

351
00:18:04,240 --> 00:18:06,840
Speaker 1: mean we saw that under this situation that were able

352
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Speaker 1: to um uh have find a loan from the i

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Speaker 1: m F for over fifty billion, which we really cover

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Speaker 1: a lot out of the financing needs or a few

355
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Speaker 1: over the next few years. And they're doing the reforms

356
00:18:18,960 --> 00:18:21,000
Speaker 1: I mean around right now. We've started to see some

357
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Speaker 1: stability on the currency and and expectations are that hopefully

358
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Speaker 1: things will get better. But there's another issue that all

359
00:18:29,640 --> 00:18:33,160
Speaker 1: this is happening at the time when presidential elections will

360
00:18:33,160 --> 00:18:36,280
Speaker 1: occur next year, so definitely we don't know what could

361
00:18:36,320 --> 00:18:38,400
Speaker 1: happen in that sense. There can be a lot of volatility,

362
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Speaker 1: in particular that thinking that they all uh political party,

363
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Speaker 1: the curisioners of the Petal News that you know, will

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Speaker 1: come back to power. But there are opportunities and and Argentina,

365
00:18:48,760 --> 00:18:50,920
Speaker 1: I mean it's it's a country in particular when you look,

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Speaker 1: uh demographic is very good, there's a high middle class

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Speaker 1: and and very low pennetuation of banking. So opportunities are

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00:18:59,320 --> 00:19:01,640
Speaker 1: there just on the on the you know, better environment,

369
00:19:01,680 --> 00:19:03,359
Speaker 1: or at least see that things starting to move in

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00:19:03,359 --> 00:19:12,000
Speaker 1: the right direction. Okay, I want to turn the globe slightly,

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Speaker 1: and we're gonna turn from South America to Asia. There's

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Speaker 1: one country in particular, I want to talk about in Asia,

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Speaker 1: which is South Korea, and South Korea is classified as

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Speaker 1: an emerging market and it's been stuck there. Eric, it's

375
00:19:25,800 --> 00:19:28,560
Speaker 1: like perpetual JV. It's like the guy who can't get

376
00:19:29,119 --> 00:19:31,719
Speaker 1: onto the varsity squad. What's going on there? Yes, so

377
00:19:31,720 --> 00:19:35,119
Speaker 1: South Korea is considered developed in the foot see line

378
00:19:35,119 --> 00:19:36,840
Speaker 1: of indexes, but in the M S c I it's

379
00:19:36,880 --> 00:19:40,360
Speaker 1: still emerging. It's the rare country that has different views there,

380
00:19:40,760 --> 00:19:43,600
Speaker 1: but most people use MS, so they considered emerging. And

381
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Speaker 1: the reason it's still there. Remember we talked about this

382
00:19:45,720 --> 00:19:48,400
Speaker 1: a couple of weeks ago and we weren't sure. Um

383
00:19:48,440 --> 00:19:50,040
Speaker 1: I got a tweet and I'll give this guy credit

384
00:19:50,119 --> 00:19:53,000
Speaker 1: quant of Asia. He's actually a good follow Um. He says.

385
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Speaker 1: South Korea is still considered an emerging market because of

386
00:19:55,119 --> 00:20:00,280
Speaker 1: capital controls and investor I D requirements can't buy REA

387
00:20:00,320 --> 00:20:04,600
Speaker 1: stocks um in certain ways. So I think that's it's

388
00:20:04,640 --> 00:20:08,760
Speaker 1: not the country itself, it's these regulations and controls which

389
00:20:08,800 --> 00:20:11,840
Speaker 1: is holding it back. So what are the other Asia

390
00:20:12,359 --> 00:20:15,200
Speaker 1: E t F that you keep an eye on, Well,

391
00:20:15,240 --> 00:20:17,640
Speaker 1: Taiwan that's that's one of the bigger ones. That's an

392
00:20:17,640 --> 00:20:20,840
Speaker 1: eleven percent waiting in the emerging market. So for most investors,

393
00:20:20,880 --> 00:20:23,960
Speaker 1: they're getting plenty of Taiwan in their broad one UM.

394
00:20:24,000 --> 00:20:26,359
Speaker 1: But then you know, you've got countries that have less waiting,

395
00:20:26,440 --> 00:20:30,639
Speaker 1: like a Vietnam that is very underrepresented in UM a

396
00:20:30,640 --> 00:20:33,760
Speaker 1: lot of these indexes, and there is a market Vectors

397
00:20:33,800 --> 00:20:38,480
Speaker 1: has the Vietnam ETF which is million actually, but there's

398
00:20:38,560 --> 00:20:41,080
Speaker 1: UM it's such a hard country to get to get

399
00:20:41,160 --> 00:20:44,240
Speaker 1: local shares in that. I believe you guys limit creations

400
00:20:44,320 --> 00:20:47,080
Speaker 1: now and then because like if there's a rush of creations,

401
00:20:47,119 --> 00:20:49,040
Speaker 1: you have to limit them to to a day or something.

402
00:20:49,040 --> 00:20:52,600
Speaker 1: But regardless, if you try doing that on your own,

403
00:20:52,640 --> 00:20:56,320
Speaker 1: you'd have a lot of difficulties. So, uh, you do

404
00:20:56,320 --> 00:20:58,919
Speaker 1: you have Vietnam. Here is an e t F that's available,

405
00:20:58,960 --> 00:21:01,760
Speaker 1: and let's look at what it's doing year to date. Um,

406
00:21:01,800 --> 00:21:05,320
Speaker 1: it's down fourteen point seven. I mean, everything we've brought

407
00:21:05,400 --> 00:21:09,159
Speaker 1: up today, with the exception of Brazil, is having a

408
00:21:09,240 --> 00:21:11,280
Speaker 1: rough year. I mean it's just been a rough year.

409
00:21:11,280 --> 00:21:14,040
Speaker 1: Remember the US was beating everybody. Now the US has

410
00:21:14,080 --> 00:21:17,160
Speaker 1: gotten its big haircut. It's down to zero this year. UM.

411
00:21:17,200 --> 00:21:18,920
Speaker 1: But all the other stuff was already in the red

412
00:21:19,359 --> 00:21:23,239
Speaker 1: Brazil's the really the only outline. Well, no Peru that

413
00:21:23,240 --> 00:21:25,040
Speaker 1: that it had a rough year too, that return was

414
00:21:25,080 --> 00:21:29,879
Speaker 1: over the long term. Okay, I'm gonna twist the globe

415
00:21:29,880 --> 00:21:33,360
Speaker 1: slightly to Mia and this is all his wheelhouse. So

416
00:21:33,760 --> 00:21:36,600
Speaker 1: what are the countries that most interest to you? Yeah,

417
00:21:36,640 --> 00:21:39,520
Speaker 1: I think one of the countries that we like at

418
00:21:39,520 --> 00:21:42,000
Speaker 1: the moment and that that's a bit of its own

419
00:21:42,040 --> 00:21:46,600
Speaker 1: story is Egypt. Um. If you recall, you know, in

420
00:21:46,640 --> 00:21:49,320
Speaker 1: twenty eleven, with the airb spring, the country went went

421
00:21:49,359 --> 00:21:52,680
Speaker 1: into a phase of political instability and a lot of change,

422
00:21:52,680 --> 00:21:57,680
Speaker 1: which also had economic implications, so the growth slowed down. Um.

423
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Speaker 1: You also had a lot of your foreign currency sources disappear,

424
00:22:01,080 --> 00:22:05,280
Speaker 1: basically foreign investment, even tourism because of the turbulence and

425
00:22:05,320 --> 00:22:07,760
Speaker 1: all of that. So what ended up happening is the

426
00:22:07,800 --> 00:22:13,160
Speaker 1: country's foreign reserves were depleted and that created further uncertainty

427
00:22:13,280 --> 00:22:16,000
Speaker 1: because you also had some issues with capital repatriation. So

428
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Speaker 1: if you had invested at the time, you got stuck

429
00:22:18,480 --> 00:22:21,639
Speaker 1: on your way out. So that created a lot of

430
00:22:21,920 --> 00:22:24,360
Speaker 1: risk aversion against the country and it was a very

431
00:22:24,359 --> 00:22:28,960
Speaker 1: difficult time obviously. Um. That changed in the last few

432
00:22:29,040 --> 00:22:31,600
Speaker 1: years after we had um, you know, we entered a

433
00:22:31,640 --> 00:22:35,680
Speaker 1: more politically stable environment with the election of presiden c

434
00:22:35,680 --> 00:22:40,280
Speaker 1: C and after that some more market trendy policies were adopted,

435
00:22:40,680 --> 00:22:43,119
Speaker 1: uh and namely, the main thing that happened was a

436
00:22:43,119 --> 00:22:46,640
Speaker 1: significant adjustment of the currency value end of twenty sixteen,

437
00:22:47,119 --> 00:22:50,240
Speaker 1: so the currency ended up losing half its value and

438
00:22:50,680 --> 00:22:53,840
Speaker 1: you know, effectively being freely floated, which was a problem before.

439
00:22:54,359 --> 00:22:57,359
Speaker 1: And that was kind of a trigger point for foreign

440
00:22:57,400 --> 00:23:00,880
Speaker 1: investments to start coming back, especially because at the time

441
00:23:00,880 --> 00:23:04,080
Speaker 1: when the country did that, we also I'm saying we

442
00:23:04,119 --> 00:23:10,280
Speaker 1: because I'm Egyptian, so forgive me sometimes I'm like from

443
00:23:10,280 --> 00:23:15,439
Speaker 1: a t F, We're with you. Egypt basically managed to

444
00:23:15,480 --> 00:23:18,679
Speaker 1: secure also an i'm F package, and that tends to

445
00:23:18,680 --> 00:23:21,920
Speaker 1: be something that provides comfort and confidence to to foreign

446
00:23:21,960 --> 00:23:24,680
Speaker 1: investors in particular because what comes with that is a

447
00:23:24,720 --> 00:23:28,720
Speaker 1: package of reforms. So we started seeing a floating currency

448
00:23:28,800 --> 00:23:33,359
Speaker 1: regime and I'M a program that basically man dated fiscal consolidation,

449
00:23:33,359 --> 00:23:36,240
Speaker 1: which was a significant problem that the country was was facing.

450
00:23:36,760 --> 00:23:41,159
Speaker 1: So naturally that put the country on track, um for

451
00:23:41,600 --> 00:23:44,720
Speaker 1: a recovery process. It doesn't mean it came without pain.

452
00:23:44,800 --> 00:23:47,600
Speaker 1: So twenties seventeen right after. It was a very difficult

453
00:23:47,680 --> 00:23:51,280
Speaker 1: year because with the currency devaluation comes a lot of

454
00:23:51,320 --> 00:23:54,639
Speaker 1: inflation because the country is quite dependent on inputs. Also,

455
00:23:54,680 --> 00:23:57,320
Speaker 1: that means that the consumer came under pressure, so you

456
00:23:57,400 --> 00:24:00,280
Speaker 1: had a lot of you know, difficulties was on the

457
00:24:00,280 --> 00:24:04,120
Speaker 1: companies with cost inflation, higher interest rates, higher inflation overall,

458
00:24:04,320 --> 00:24:07,960
Speaker 1: and a weaker consumer. But the good news is um

459
00:24:08,640 --> 00:24:15,080
Speaker 1: but yeah, the good news is interact. Yeah you saw.

460
00:24:15,200 --> 00:24:17,879
Speaker 1: You know, Egypt as a case in general has always

461
00:24:17,920 --> 00:24:20,879
Speaker 1: been interesting for investors because, you know, similar to what

462
00:24:20,920 --> 00:24:23,520
Speaker 1: we mentioned before about a lot of em and frontier countries,

463
00:24:23,960 --> 00:24:27,520
Speaker 1: hundred million people, very young population so roughly fifty percent

464
00:24:27,640 --> 00:24:30,080
Speaker 1: of the population is younger than twenty five years old

465
00:24:30,560 --> 00:24:33,879
Speaker 1: and also very underserved, and you have consumption per capita

466
00:24:33,960 --> 00:24:36,679
Speaker 1: being quite low on very basic goods like milk, like

467
00:24:36,760 --> 00:24:39,640
Speaker 1: you know, the most basic of consumer products. So there's

468
00:24:39,640 --> 00:24:43,400
Speaker 1: a lot of growth opportunity there. So with this reform

469
00:24:43,480 --> 00:24:47,040
Speaker 1: package that started UM, foreign investor started looking back at

470
00:24:47,040 --> 00:24:50,040
Speaker 1: the market and we started seeing influence first on the

471
00:24:50,080 --> 00:24:53,280
Speaker 1: fixed income side, but also in the equity market as well.

472
00:24:53,720 --> 00:24:57,439
Speaker 1: The valuations remain quite reasonable, so now you're starting to

473
00:24:57,440 --> 00:25:00,359
Speaker 1: see GDP growth recover again getting closer to a five

474
00:25:00,400 --> 00:25:04,919
Speaker 1: percent level. Um inflation after twenty seventeen is starting to

475
00:25:04,960 --> 00:25:09,359
Speaker 1: be on a declining trend, which is obviously positive. Interest

476
00:25:09,480 --> 00:25:12,359
Speaker 1: rates are still high, so we haven't really seen a

477
00:25:12,400 --> 00:25:15,879
Speaker 1: lot of capital expenditure by companies yet. But what the

478
00:25:15,880 --> 00:25:19,880
Speaker 1: companies have been doing is paying back their dead managing

479
00:25:19,920 --> 00:25:22,800
Speaker 1: their costs, and so trying to get like very efficient

480
00:25:22,920 --> 00:25:25,760
Speaker 1: with how they use capital and how they manage their

481
00:25:25,760 --> 00:25:28,479
Speaker 1: cash flows. So we are actually setting up for a

482
00:25:28,520 --> 00:25:32,159
Speaker 1: period where you start seeing um consumption recovery in a

483
00:25:32,200 --> 00:25:35,879
Speaker 1: more significant fashion, companies that are more efficient and ready

484
00:25:35,920 --> 00:25:39,440
Speaker 1: to invest, and valuations that are very reasonable. So Egypt

485
00:25:39,480 --> 00:25:41,359
Speaker 1: is trading at a discount to the broader e M,

486
00:25:41,800 --> 00:25:43,719
Speaker 1: even though if you look at the growth rates there

487
00:25:43,720 --> 00:25:46,359
Speaker 1: are significantly higher than what the broader e M offers

488
00:25:46,480 --> 00:25:48,960
Speaker 1: in the next three year period. So we like to

489
00:25:49,240 --> 00:25:51,920
Speaker 1: usually look at tag Grady show, which is how much

490
00:25:51,960 --> 00:25:54,920
Speaker 1: you're paying for every unit of growth, and in Egypt's case,

491
00:25:54,920 --> 00:25:57,800
Speaker 1: I think it's around point five. Now you said you

492
00:25:57,880 --> 00:26:00,440
Speaker 1: just made this strong case, let me push back little bit.

493
00:26:00,520 --> 00:26:03,280
Speaker 1: So there's an a t F e g PT. It

494
00:26:03,440 --> 00:26:06,320
Speaker 1: is down big this year, and it looks like It's

495
00:26:06,320 --> 00:26:08,119
Speaker 1: been a struggle for the past couple of years, a

496
00:26:08,119 --> 00:26:11,200
Speaker 1: couple of nice spikes, but I mean, when when will

497
00:26:11,240 --> 00:26:13,880
Speaker 1: this pay off? Are there bigger macro issues that sort

498
00:26:13,920 --> 00:26:17,200
Speaker 1: of suppress everything you just said, I mean, I think

499
00:26:18,080 --> 00:26:20,800
Speaker 1: I wouldn't say there. So I've mentioned that we're coming

500
00:26:20,840 --> 00:26:24,359
Speaker 1: from a very difficult period, right, so I'm always looking forward.

501
00:26:24,800 --> 00:26:28,040
Speaker 1: Twenty seventeen was difficult because for the country to stabilize

502
00:26:28,080 --> 00:26:30,840
Speaker 1: the currency after the devaluation, the central bank had to

503
00:26:30,920 --> 00:26:34,119
Speaker 1: go ahead and hike interest rates quite significantly, and that

504
00:26:34,440 --> 00:26:37,919
Speaker 1: put pressure on companies as well. Um Even though broadly

505
00:26:37,920 --> 00:26:41,960
Speaker 1: speaking the Egyptian companies are under leveraged, but you still

506
00:26:42,080 --> 00:26:44,480
Speaker 1: suffer from like higher interest rates or higher cost of that,

507
00:26:44,720 --> 00:26:48,560
Speaker 1: a weaker consumer um and just cost inflation. That was

508
00:26:48,680 --> 00:26:52,879
Speaker 1: very significant. Now, I think we're coming closer to the

509
00:26:53,000 --> 00:26:55,600
Speaker 1: end of that period and you're bound to see the

510
00:26:55,680 --> 00:26:59,000
Speaker 1: recovery we were hoping, and I think that that holds

511
00:26:59,000 --> 00:27:02,119
Speaker 1: true for the broader investment community. We were hoping that

512
00:27:02,200 --> 00:27:06,159
Speaker 1: interest rates would start coming down faster than what we

513
00:27:06,240 --> 00:27:11,400
Speaker 1: are actually seeing. Unfortunately, because the country was subsidizing fuel

514
00:27:11,440 --> 00:27:15,520
Speaker 1: prices and has been gradually eliminating these subsidies. When oil

515
00:27:15,560 --> 00:27:19,240
Speaker 1: prices increased again this year, that put again some pressure

516
00:27:19,280 --> 00:27:21,919
Speaker 1: on the on the physical side of things, and forced

517
00:27:21,920 --> 00:27:26,600
Speaker 1: the country to go through further subsidy removal, which again

518
00:27:26,800 --> 00:27:29,760
Speaker 1: you know, affected inflation and made it harder to bring

519
00:27:29,800 --> 00:27:31,879
Speaker 1: down the interest rates as fast as we were hoping.

520
00:27:32,320 --> 00:27:34,960
Speaker 1: So I think once we passed through the spirit and

521
00:27:35,000 --> 00:27:38,520
Speaker 1: you start seeing interest rates coming down and companies going

522
00:27:38,600 --> 00:27:42,879
Speaker 1: back to an investment cycle, then you should start seeing

523
00:27:42,920 --> 00:27:46,280
Speaker 1: the market also react more positively. This is why people

524
00:27:46,680 --> 00:27:51,280
Speaker 1: outsource this to mutual funds and ETFs. That is very complicated.

525
00:27:51,320 --> 00:27:53,560
Speaker 1: It almost from is your pilot going over all the

526
00:27:53,600 --> 00:27:56,520
Speaker 1: things in the cockpit, like what did you say? Um, no,

527
00:27:56,720 --> 00:27:59,760
Speaker 1: it look this is very important. Egypt, by the way,

528
00:28:00,040 --> 00:28:02,280
Speaker 1: is even more lost than Peru. It's only a point

529
00:28:02,920 --> 00:28:07,280
Speaker 1: one four percent waiting in emerging markets, so you're just

530
00:28:07,320 --> 00:28:09,560
Speaker 1: not getting Egypt if you're out there pretty much unless

531
00:28:09,600 --> 00:28:12,400
Speaker 1: you use e g PT, which, by the way, during

532
00:28:12,440 --> 00:28:15,200
Speaker 1: the Arab Spring, this e t F was famous because

533
00:28:15,200 --> 00:28:17,760
Speaker 1: it um the stock market closed for two months, right,

534
00:28:18,240 --> 00:28:22,000
Speaker 1: and the e t F traded and that that's Sometimes

535
00:28:22,040 --> 00:28:24,359
Speaker 1: the e t F becomes like a futures contract on

536
00:28:24,359 --> 00:28:28,040
Speaker 1: a market and then when the market opens, the prices

537
00:28:28,119 --> 00:28:30,000
Speaker 1: usually come back up to where the et F was trading,

538
00:28:30,000 --> 00:28:31,320
Speaker 1: even though it looks like the e t S trading

539
00:28:31,320 --> 00:28:33,840
Speaker 1: at a premium. Now this does lead us to Africa

540
00:28:33,840 --> 00:28:36,840
Speaker 1: as in general. Sometimes it's called us like the lion

541
00:28:37,520 --> 00:28:39,640
Speaker 1: uh in, you know, the Asia tiger, the African lion.

542
00:28:40,120 --> 00:28:43,320
Speaker 1: I've looked at Africa many times again. Vanneck has another

543
00:28:43,360 --> 00:28:45,320
Speaker 1: e t F called a FK. It's the only pure

544
00:28:45,320 --> 00:28:48,360
Speaker 1: Africa e t F. Egypt is a huge waiting Let

545
00:28:48,360 --> 00:28:51,280
Speaker 1: me give you numbers on Africa, Okay, a f K.

546
00:28:51,480 --> 00:28:54,080
Speaker 1: This is over the last six years since it came out,

547
00:28:54,600 --> 00:28:58,800
Speaker 1: Africa's down. The Emerging Markets Index is up four percent,

548
00:28:58,920 --> 00:29:04,120
Speaker 1: so flat Frontier Market Index is up thirty um. So

549
00:29:04,200 --> 00:29:07,440
Speaker 1: Africa has underperformed, and of course the US is crushing

550
00:29:07,480 --> 00:29:11,120
Speaker 1: all that. It's really like the bottom dwelling area of

551
00:29:11,160 --> 00:29:13,800
Speaker 1: the whole world in terms of returns, and it's p

552
00:29:14,120 --> 00:29:16,160
Speaker 1: is down to what like ten or eleven? I mean,

553
00:29:16,800 --> 00:29:19,680
Speaker 1: if there's ever if somebody likes bargains, this seems to

554
00:29:19,680 --> 00:29:22,800
Speaker 1: be like a bargain by what would help the whole

555
00:29:22,840 --> 00:29:27,400
Speaker 1: continent beyond Egypt actually reach this potential that so many

556
00:29:27,440 --> 00:29:30,640
Speaker 1: people say yeah, I mean Africa, like you mentioned, it's

557
00:29:30,680 --> 00:29:33,680
Speaker 1: it's kind of um, it's kind of a continent that's

558
00:29:33,840 --> 00:29:36,760
Speaker 1: quite interesting, and people always have this hope that Africa

559
00:29:36,800 --> 00:29:39,200
Speaker 1: will provide a lot of growth opportunity, which I think

560
00:29:39,200 --> 00:29:42,360
Speaker 1: long term it would just by virtue again of demographics

561
00:29:42,400 --> 00:29:46,640
Speaker 1: and how underserved a lot of these countries are. For example,

562
00:29:46,640 --> 00:29:51,480
Speaker 1: in Nigeria and Nigeria, South Africa can like like there

563
00:29:51,480 --> 00:29:54,520
Speaker 1: are like even within Africa, like there are some some

564
00:29:54,520 --> 00:29:57,200
Speaker 1: some places that we think will will rise to sort

565
00:29:57,240 --> 00:30:01,240
Speaker 1: of like this frontier emerging market level and really be resiliant, right,

566
00:30:01,600 --> 00:30:03,040
Speaker 1: And I think, I mean that there is a lot

567
00:30:03,080 --> 00:30:05,760
Speaker 1: of merit to that argument over the long term. So

568
00:30:05,760 --> 00:30:07,800
Speaker 1: so I'm definitely a believer in the content over the

569
00:30:07,840 --> 00:30:10,840
Speaker 1: long term. The issue and and it treaty varies by country,

570
00:30:10,880 --> 00:30:12,960
Speaker 1: but a lot of these countries have faced their share

571
00:30:13,040 --> 00:30:17,080
Speaker 1: their fair share of political events and you know, changes

572
00:30:17,120 --> 00:30:20,640
Speaker 1: in leadership, different things that have in the short term

573
00:30:20,680 --> 00:30:25,120
Speaker 1: created a lot of difficulties and and and volatility. So

574
00:30:25,200 --> 00:30:28,640
Speaker 1: if you think about South Africa, when you got Serilier

575
00:30:28,680 --> 00:30:33,840
Speaker 1: Opposa in office earlier this year, there was a lot

576
00:30:33,920 --> 00:30:38,160
Speaker 1: of hope and a lot of euphoria around the Ramaposa win.

577
00:30:38,760 --> 00:30:42,760
Speaker 1: And you know, I think the issue there is you

578
00:30:42,920 --> 00:30:46,320
Speaker 1: haven't Given that they have general elections coming up next year,

579
00:30:46,800 --> 00:30:49,560
Speaker 1: the window this year was difficult for for him to

580
00:30:49,600 --> 00:30:52,400
Speaker 1: really come through with some of the structural reforms that

581
00:30:52,480 --> 00:30:55,280
Speaker 1: the country would need to recreate growth and to to

582
00:30:55,400 --> 00:30:59,400
Speaker 1: become more exciting as an investment destination, and in particular

583
00:30:59,400 --> 00:31:01,520
Speaker 1: in South Africa this case. The issue there is also

584
00:31:01,560 --> 00:31:04,200
Speaker 1: you have a significant domestic investor based so a lot

585
00:31:04,240 --> 00:31:08,120
Speaker 1: of domestic institutional money that has to invest in South Africa.

586
00:31:08,280 --> 00:31:11,360
Speaker 1: So for the level of growth that's being offered, South

587
00:31:11,400 --> 00:31:15,160
Speaker 1: Africa is really not that cheap. So the hope is

588
00:31:15,240 --> 00:31:18,239
Speaker 1: next year, after we passed through the election cycle, we

589
00:31:18,240 --> 00:31:22,719
Speaker 1: started seeing some promising structural reform and then we go

590
00:31:22,800 --> 00:31:28,360
Speaker 1: into a more interesting, hopefully recovery cycle. But we haven't

591
00:31:28,360 --> 00:31:30,960
Speaker 1: seen that come through yet. So that's unfortunate. In the

592
00:31:30,960 --> 00:31:33,560
Speaker 1: case of Nigeria, which is kind of, um, you know,

593
00:31:33,600 --> 00:31:36,560
Speaker 1: the most in some ways one of the most interesting

594
00:31:36,600 --> 00:31:40,160
Speaker 1: countries given the just the size of the population and

595
00:31:40,160 --> 00:31:44,480
Speaker 1: and theoretically this should be a black horse in many

596
00:31:44,480 --> 00:31:47,320
Speaker 1: ways given that it's also an energy rich country. It

597
00:31:47,400 --> 00:31:50,080
Speaker 1: has been very unfortunate. I remember I was in Nigeria

598
00:31:50,120 --> 00:31:53,960
Speaker 1: in twenty fifteen right after Bohari one and again at

599
00:31:53,960 --> 00:31:56,120
Speaker 1: the time, there was a lot of hope that you know,

600
00:31:56,160 --> 00:31:58,960
Speaker 1: he would come through combating corruption, which is one of

601
00:31:59,000 --> 00:32:03,719
Speaker 1: the most significant issues in Nigeria, given that it's very

602
00:32:03,720 --> 00:32:06,000
Speaker 1: hard the corruption scale. And you went through a significant

603
00:32:06,080 --> 00:32:08,440
Speaker 1: period of high oil prices, but at the same time,

604
00:32:08,520 --> 00:32:11,400
Speaker 1: the reserves weren't nearly where they were supposed to be

605
00:32:11,480 --> 00:32:14,680
Speaker 1: from from the perspective of the country really benefiting, and

606
00:32:14,720 --> 00:32:17,840
Speaker 1: a lot of that is because of corruption unfortunately, UM

607
00:32:17,880 --> 00:32:20,680
Speaker 1: and he was also supposed to bring back security, introduce

608
00:32:20,720 --> 00:32:24,040
Speaker 1: economic reform. There has been a sense that there was

609
00:32:24,400 --> 00:32:27,760
Speaker 1: under delivering on the part of the Boharia administration. Now

610
00:32:27,800 --> 00:32:30,800
Speaker 1: again we're going into an election cycle next next year

611
00:32:31,040 --> 00:32:34,400
Speaker 1: UM in February, with Boharia and another candidate opposition Candida,

612
00:32:34,680 --> 00:32:38,000
Speaker 1: contesting this election. So I think we're going through a

613
00:32:38,000 --> 00:32:42,440
Speaker 1: period of uncertainty in Nigeria again. No doubt, oil prices

614
00:32:42,520 --> 00:32:45,280
Speaker 1: are a bit more supportive this year in terms of

615
00:32:45,600 --> 00:32:49,080
Speaker 1: improving growth and improving the availability of foreign currency. But

616
00:32:49,200 --> 00:32:51,800
Speaker 1: for you to really see you know, an improvement and

617
00:32:51,880 --> 00:32:54,880
Speaker 1: income per capita, which then is going to be supportive

618
00:32:54,880 --> 00:33:02,520
Speaker 1: for consumption, you need to see structural reform. So I

619
00:33:02,520 --> 00:33:05,840
Speaker 1: have one more if we if we started with a

620
00:33:06,040 --> 00:33:10,560
Speaker 1: political hot potato with Brazil, there's one other country, um,

621
00:33:10,760 --> 00:33:13,440
Speaker 1: Saudi Arabia that's also been in the headlines recently, So

622
00:33:13,560 --> 00:33:16,040
Speaker 1: we can book in this with with Brazil and then

623
00:33:16,040 --> 00:33:19,000
Speaker 1: Saudi Arabia. So how do you look at Saudi Arabia

624
00:33:19,080 --> 00:33:23,160
Speaker 1: now through an investing lens, considering all the turmoil of

625
00:33:23,240 --> 00:33:28,640
Speaker 1: recent weeks in the headlines, Yeah, I mean it's um.

626
00:33:28,640 --> 00:33:31,760
Speaker 1: It's obviously quite freshened. I mean, I'm not sure I

627
00:33:31,760 --> 00:33:34,920
Speaker 1: have I know a lot more about anything specifically related

628
00:33:34,960 --> 00:33:37,320
Speaker 1: to the recent headlines than what you see on the news.

629
00:33:37,760 --> 00:33:41,600
Speaker 1: But generally speaking, I mean Saudi again is um in

630
00:33:41,640 --> 00:33:44,400
Speaker 1: the context of the Mina region, one of the more

631
00:33:44,480 --> 00:33:48,440
Speaker 1: interesting countries because you know, it's also a very young

632
00:33:48,480 --> 00:33:52,760
Speaker 1: population and overall wealth leveled and infrastructure development and so

633
00:33:52,800 --> 00:33:55,160
Speaker 1: on is a bit better than your average emerging market.

634
00:33:55,760 --> 00:33:58,320
Speaker 1: And you have a market that's actually quite liquid, which

635
00:33:58,360 --> 00:34:01,120
Speaker 1: is unusual for some of for at least the mean region,

636
00:34:01,160 --> 00:34:04,200
Speaker 1: it's it's the most liquid one. The country went through

637
00:34:04,240 --> 00:34:08,479
Speaker 1: its own share of problems with the decline and oil

638
00:34:08,520 --> 00:34:12,760
Speaker 1: prices and twenty fifteen, so they were forced to start looking,

639
00:34:12,880 --> 00:34:14,799
Speaker 1: you know, reflecting at how they run the economy and

640
00:34:14,800 --> 00:34:17,759
Speaker 1: trying to diversify away from oil over time with the

641
00:34:17,840 --> 00:34:21,920
Speaker 1: vision twenty thirty, I mean, I think the delivery on

642
00:34:22,000 --> 00:34:24,759
Speaker 1: that has been maybe a little less than what we

643
00:34:24,760 --> 00:34:29,520
Speaker 1: were hoping, but I would say high level, probably the

644
00:34:29,560 --> 00:34:32,799
Speaker 1: worst from an economic standpoint is behind us, because you

645
00:34:32,840 --> 00:34:35,840
Speaker 1: did go through a significant fiscal adjustment, at least in

646
00:34:35,840 --> 00:34:39,839
Speaker 1: the context of Saudi. So overall, going forward, I think

647
00:34:39,880 --> 00:34:44,360
Speaker 1: we are probably more cautiously optimistic for a recovery. The

648
00:34:44,440 --> 00:34:47,440
Speaker 1: other thing with Saudi, to your point about, you know,

649
00:34:47,520 --> 00:34:51,360
Speaker 1: the index inclusion and these sort of graduate graduation events,

650
00:34:51,600 --> 00:34:53,920
Speaker 1: Saudi is actually now not part of any index, but

651
00:34:53,960 --> 00:34:56,600
Speaker 1: because of the size of the market and the liquidity there,

652
00:34:57,080 --> 00:35:01,480
Speaker 1: it's actually being included right away in the Emerging Markets index.

653
00:35:01,520 --> 00:35:06,600
Speaker 1: And the announcement came by both um UM MSCI and

654
00:35:06,719 --> 00:35:09,239
Speaker 1: FOOTSIE over the course of the last few months. So

655
00:35:09,280 --> 00:35:11,920
Speaker 1: we are looking at an event as well where you're

656
00:35:11,960 --> 00:35:15,760
Speaker 1: seeing you're you're bound to see index inclusion, and given

657
00:35:15,760 --> 00:35:19,560
Speaker 1: its size, it's actually going to be a relatively significant

658
00:35:19,560 --> 00:35:22,240
Speaker 1: weight of the MSc I E M Index. And probably

659
00:35:22,239 --> 00:35:24,560
Speaker 1: one of the higher weights in the emia region. So

660
00:35:24,600 --> 00:35:27,839
Speaker 1: you should start seeing a lot more um investors looking

661
00:35:27,840 --> 00:35:30,600
Speaker 1: at that. Certainly passive money would have to, you know,

662
00:35:30,719 --> 00:35:34,600
Speaker 1: revisit the country which it has afforded to ignore for

663
00:35:34,640 --> 00:35:38,800
Speaker 1: such a long period. So I think some uncertainties for sure.

664
00:35:39,239 --> 00:35:44,360
Speaker 1: Headlines definitely not great interesting. Well, let me give you

665
00:35:44,400 --> 00:35:47,120
Speaker 1: the numbers. I personally think in the case of this

666
00:35:47,200 --> 00:35:50,480
Speaker 1: recent where the journalist was killed, horrible situation. Okay, it

667
00:35:50,520 --> 00:35:54,040
Speaker 1: was bad, However, it didn't do that much to the

668
00:35:54,040 --> 00:35:56,799
Speaker 1: e t F it's up. In the last two years,

669
00:35:57,239 --> 00:35:59,360
Speaker 1: it did hurt it like a couple of percentage points,

670
00:35:59,360 --> 00:36:01,920
Speaker 1: but this year to date this thing is still up

671
00:36:01,960 --> 00:36:06,560
Speaker 1: six te Ola Patricia from Vaneck, thank you so much

672
00:36:06,560 --> 00:36:11,520
Speaker 1: for joining us. Entrell you can say thank you so much.

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00:36:12,400 --> 00:36:17,840
Speaker 1: Thank you guys, No, thanks for listening to trillion until

674
00:36:17,880 --> 00:36:19,680
Speaker 1: next time. You can find us on the Bloomberg terminal,

675
00:36:19,920 --> 00:36:24,080
Speaker 1: Bloomberg dot com, Apple Podcast, Spotify, and where else you

676
00:36:24,120 --> 00:36:26,640
Speaker 1: like to listen. We'd love to hear from you. We're

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00:36:26,640 --> 00:36:31,160
Speaker 1: on Twitter, I'm at Joel Weber Show, He's at Eric Faltunist,

678
00:36:31,640 --> 00:36:36,480
Speaker 1: and you can follow Vanex at Vaneck Underscore US trillions

679
00:36:36,600 --> 00:36:39,919
Speaker 1: is produced by Magnus Hendrickson. Francesca Levy is the head

680
00:36:39,960 --> 00:36:41,920
Speaker 1: of Bloomberg podcast Bye