WEBVTT - Around the World With ETFs 0:00:05.840 --> 0:00:12.160 Welcome on Trillions. I'm Joel Weber and I'm Eric Bells. Eric. 0:00:12.240 --> 0:00:15.640 Next week in Singapore, Bloomberg is hosting something called the 0:00:15.680 --> 0:00:18.800 New Economy Forum, and the idea with this form is 0:00:18.840 --> 0:00:22.079 that it's going to be dedicated to talking about emerging 0:00:22.079 --> 0:00:27.200 economies around the world, which largely come from Amia and 0:00:27.440 --> 0:00:31.360 South America, Latin America, Africa. And so I wanted to 0:00:31.360 --> 0:00:33.600 take this episode of Trillions to sort of talk about 0:00:33.960 --> 0:00:36.760 um an investing lens that's different than one that we 0:00:36.840 --> 0:00:38.360 usually talked about because we haven't done this on the 0:00:38.360 --> 0:00:42.200 show yet, talking about countries outside of the developed world, right, Yeah, 0:00:42.200 --> 0:00:45.519 So this would be emerging markets and then frontier countries, 0:00:45.920 --> 0:00:49.640 which is sort of like the there's actually like official classifications. Yes, 0:00:49.680 --> 0:00:52.720 that's right, and and some get promoted. Uh, you know, 0:00:52.760 --> 0:00:54.800 it does remind me of you know, freshman year, j 0:00:54.960 --> 0:00:57.440 V and varsity in terms of the way it took 0:00:57.440 --> 0:01:00.400 a three pronged system. But in the immerge, NG and 0:01:00.480 --> 0:01:03.360 frontier areas there's a lot of opportunity, there's a lot 0:01:03.360 --> 0:01:05.920 more volatility. Just to put some numbers on this. In 0:01:05.959 --> 0:01:08.680 the e t F world, emerging markets e t F 0:01:08.720 --> 0:01:10.040 s as a whole, like when you invest in the 0:01:10.080 --> 0:01:12.399 whole region at once, have a hundred and seventy four billion, 0:01:12.720 --> 0:01:15.880 that's a lot. That's six of all e t F assets. 0:01:15.880 --> 0:01:18.920 But the countries when you go into a specific country 0:01:18.920 --> 0:01:21.319 and emerging markets, those e t f s only have 0:01:21.400 --> 0:01:24.440 forty one billions, So that's just over one percent of 0:01:24.440 --> 0:01:27.000 the assets. And most people who do who use those 0:01:27.040 --> 0:01:30.360 are traders. But I mean, mom and pop, if you 0:01:30.440 --> 0:01:33.400 are very interested in a country, uh that's you know, 0:01:33.480 --> 0:01:36.479 way out there, way developing. E t F serve up 0:01:36.600 --> 0:01:39.240 almost all of them at this point that are investable, 0:01:39.520 --> 0:01:43.600 from Vietnam to Argentina to Egypt. Um, there's just one 0:01:43.600 --> 0:01:46.440 for Pakistan. Uh you can now and and back in 0:01:46.440 --> 0:01:49.320 the day, this was very difficult to get local shares 0:01:49.360 --> 0:01:52.120 of these countries. You needed to know people. Now you 0:01:52.160 --> 0:01:54.480 can just buy it, like buying shares of Microsoft. So 0:01:54.520 --> 0:01:57.680 when we sometimes talk about et F sort of democratizing investing, 0:01:57.720 --> 0:02:01.360 this is a great example. Now anybody can get these countries. 0:02:01.400 --> 0:02:04.320 They're literally delivered to your doorstep. Um, and that's one 0:02:04.320 --> 0:02:07.240 of the reasons they're fairly popular and growing. Speaking of 0:02:07.280 --> 0:02:10.760 growing the population of these countries that we're talking about, 0:02:10.800 --> 0:02:13.440 when you look at um I m F numbers for them. 0:02:13.480 --> 0:02:16.200 If you take emerging and developing and put them all together. 0:02:16.240 --> 0:02:20.119 We're talking about of the world's population. So this could 0:02:20.200 --> 0:02:21.800 be I mean, when you really step back and think 0:02:21.800 --> 0:02:24.440 about it's like the long term growth plate because there's 0:02:24.480 --> 0:02:27.280 so much potential in these economies. Yeah, and the US 0:02:27.440 --> 0:02:30.400 market is by a market cap is so dominant in 0:02:30.480 --> 0:02:33.200 disproportioned to the number of people we have. So you're 0:02:33.280 --> 0:02:36.320 right there, there's a bit of an imbalance in terms 0:02:36.360 --> 0:02:37.959 of the size of our star stock market and the 0:02:38.000 --> 0:02:41.080 number of people and the growth potential over there. Although 0:02:41.080 --> 0:02:42.320 I will say and I hope we bring this up 0:02:42.320 --> 0:02:45.760 in the discussion, um there. Look, there are many times 0:02:45.800 --> 0:02:48.720 when a country has a good story written about it, 0:02:48.639 --> 0:02:50.919 it looks like there's a lot of growth, the pe 0:02:51.040 --> 0:02:53.520 is low and it just doesn't go up. In fact, 0:02:53.560 --> 0:02:55.200 they could go down worse, and so there is a 0:02:55.200 --> 0:02:57.400 lot of risk. Can't wait to talk about that, and 0:02:57.440 --> 0:03:00.120 so for this discussion, because yours truly knows the t 0:03:00.400 --> 0:03:02.520 s very well, but I don't know every single country 0:03:02.560 --> 0:03:04.960 out there. In fact, sometimes I have to scramble. It's 0:03:04.960 --> 0:03:07.200 like doing a book report of talk about Vietnam today Okay, 0:03:07.200 --> 0:03:10.200 I gotta look at Wikipedia and do my homework. But 0:03:10.440 --> 0:03:12.079 rather than me doing that, we brought in a couple 0:03:12.120 --> 0:03:15.040 of experts from Van Eck who are specialists in these 0:03:15.040 --> 0:03:17.000 countries and do nothing but look at them all day. 0:03:17.320 --> 0:03:18.760 And if you want to learn more about the New 0:03:18.760 --> 0:03:21.960 Economy Forum, there's a great new podcast. You've heard it 0:03:22.040 --> 0:03:26.560 teased in our feed before. The host is Stephanie Flanders 0:03:26.639 --> 0:03:29.239 and the name of the show is The New Economy 0:03:31.800 --> 0:03:35.160 This week Countrilliance all around the World and e t s. 0:03:36.640 --> 0:03:39.360 We have a couple of guests, Ola, Patricia, Welcome to 0:03:39.400 --> 0:03:42.840 the show. Hi guys, y, Yes, thank you for having us. 0:03:42.960 --> 0:03:45.600 So you guys are at van Neck, Can you describe 0:03:45.600 --> 0:03:49.880 what you do there? Sure? Um, I'm all I'm at 0:03:49.920 --> 0:03:53.440 one of the senior analysts on the Emerging Markets Equity 0:03:53.560 --> 0:03:57.520 fund at Vanack, more on the active side than the ETF, 0:03:57.680 --> 0:03:59.960 but happy to be here and talk about the countries 0:04:00.040 --> 0:04:03.240 I look at. And Patricia, Yes, I'm Patricia Gonzales. I'm 0:04:03.280 --> 0:04:06.920 also a senior analyst Advanik and focusing more on Latin 0:04:06.960 --> 0:04:09.800 America and a couple of countries in Asia, and I'm 0:04:09.920 --> 0:04:12.240 very happy to be here. And you know, they are 0:04:12.320 --> 0:04:14.280 from the active side. You hear that, So a lot 0:04:14.280 --> 0:04:16.760 of these shops have both e T s and active 0:04:17.200 --> 0:04:20.800 mutual funds and so, uh, lunch lunch is really interesting. 0:04:23.440 --> 0:04:25.320 I'm sure there's some tension you can cut with a 0:04:25.360 --> 0:04:28.360 knife now, I'm just kidding. Um. The reason that we 0:04:28.360 --> 0:04:30.120 would get somebody from active side is the E T 0:04:30.279 --> 0:04:32.600 F product specialists are just not going to know as 0:04:32.680 --> 0:04:35.000 much because they're out there looking for individual stocks in 0:04:35.000 --> 0:04:37.800 these areas. So they're the perfect people for this. Even 0:04:37.800 --> 0:04:40.160 though we tend to normally have et F people on 0:04:40.680 --> 0:04:42.800 um they work need work and et F company though, 0:04:43.000 --> 0:04:47.239 so you're kind of into it a little bit. But yeah, okay, UM, 0:04:47.279 --> 0:04:50.120 so how do you guys look at the difference between 0:04:50.240 --> 0:04:55.120 frontier and emerging markets? Because that's sort of frontier is 0:04:55.160 --> 0:04:58.160 more j V and then you get promoted to or 0:04:58.279 --> 0:05:04.240 I guess frontiers frontiers spread shman emerging markets. So how 0:05:04.279 --> 0:05:08.320 do you guys look at it through your investing went? Yeah, 0:05:08.440 --> 0:05:11.120 I mean I would say that the classification that most 0:05:11.120 --> 0:05:13.720 people follow tends to be from the index classification by 0:05:13.800 --> 0:05:17.480 ms c I. But as far as we're concerned, we 0:05:17.520 --> 0:05:21.280 really are looking for countries that offer longer term development 0:05:21.360 --> 0:05:25.000 and growth opportunities. Whether it's on the the you know, 0:05:25.080 --> 0:05:28.000 emerging side, whether it's on the frontier side, we kind 0:05:28.040 --> 0:05:32.479 of don't really care as much. UM. Frontier markets tend 0:05:32.520 --> 0:05:36.640 to have less experience with foreign institutional investors. UH, some 0:05:36.720 --> 0:05:38.880 of the liquid you know, liquidity, and some of those 0:05:38.920 --> 0:05:42.640 markets can be more challenging. UH. Some of the capital 0:05:42.640 --> 0:05:45.880 market laws are still being developed, so they tend to 0:05:45.920 --> 0:05:48.080 be a bit earlier stage, let's say, in their cycle 0:05:48.120 --> 0:05:50.919 of development. So we're always mindful of that when we 0:05:50.960 --> 0:05:54.080 do our analysis and due diligence on companies and UM 0:05:54.160 --> 0:05:57.479 and countries. But I think we're looking for opportunity and 0:05:57.560 --> 0:06:00.000 we can find that. I mean, there are shared characteristics 0:06:00.000 --> 0:06:03.880 between both in terms of UM typically having larger populations, 0:06:04.279 --> 0:06:10.080 younger populations, so a lot of runway for growth going forward. Yes, 0:06:10.120 --> 0:06:12.839 I agree with with all that. Mean in a particular case, 0:06:12.960 --> 0:06:16.919 we look at either emerging or frontier UH, and the 0:06:16.920 --> 0:06:19.200 main characteristic, like she says, a lot of the frontier 0:06:19.320 --> 0:06:21.920 market UM like the liquidity steel and they have a 0:06:22.440 --> 0:06:25.240 capital market that is not very developed. But certainly, like 0:06:25.360 --> 0:06:27.880 you said, there are still very good opportunities to demographic 0:06:27.960 --> 0:06:31.200 is there so UM there's a lot of opportunities in both. 0:06:36.520 --> 0:06:38.960 So with that said, obviously you're just looking for countries 0:06:39.000 --> 0:06:40.600 a lot of growth. Let's just jump in and talk 0:06:40.640 --> 0:06:43.839 about Brazil. An interesting one, an interesting one. This is 0:06:43.839 --> 0:06:46.760 sort of the like I said, the soccer ball is 0:06:46.800 --> 0:06:49.159 always landing on one of these countries at some point, 0:06:49.279 --> 0:06:51.560 and right now it's on Brazil because there's an election 0:06:52.040 --> 0:06:55.440 and as I tell people, Single Country Emerging Market TTFS 0:06:55.480 --> 0:06:59.440 like nothing better than a pro business conservative leader elected. 0:07:00.040 --> 0:07:02.159 Is that right? So walk us through what happened. Because 0:07:02.560 --> 0:07:05.960 e w Z, which tracks Brazil is up twenty in October. 0:07:06.440 --> 0:07:09.800 You know how bloody and brutal October was for everybody else, 0:07:10.160 --> 0:07:12.680 So that's how much that they really liked this election. 0:07:12.680 --> 0:07:16.840 And this election was was a little controversial. Civilly had 0:07:16.880 --> 0:07:19.440 a lot of attention, that's correct. Well, yeah, like you 0:07:19.480 --> 0:07:23.920 said last Sunday, they had the presidential elections and Jabel Sonado, 0:07:23.960 --> 0:07:27.080 who was a former army captain and a congressman one 0:07:27.520 --> 0:07:30.000 at the election. The other candidate was Fernando had that 0:07:30.160 --> 0:07:32.840 with was part of the Workers Party more on the left, 0:07:32.840 --> 0:07:36.760 that was the party of former president Silva. So definitely 0:07:37.040 --> 0:07:40.080 also NATO the more market friendly of the two uh 0:07:40.120 --> 0:07:42.720 and and his victory was already anticipated by the market 0:07:42.760 --> 0:07:44.760 and that's one of the main reasons what we had saw, 0:07:45.120 --> 0:07:47.960 you know, a very good rally on the equity side 0:07:48.440 --> 0:07:51.840 over the last month and the expectation that he's going 0:07:51.880 --> 0:07:54.640 to be very you know, market friendly. I mean, um, 0:07:54.800 --> 0:07:57.480 the most important thing for him to do is really 0:07:57.840 --> 0:08:01.080 attack on the fiscal side as some main issue for Brazil. 0:08:01.120 --> 0:08:03.200 The fiscal deficity is really one of the largest in 0:08:03.240 --> 0:08:06.840 emerging market. But he said the right things and I 0:08:06.880 --> 0:08:10.080 think that's one of the main focus of his new government. 0:08:10.200 --> 0:08:12.360 So if that's the case, I mean, we can really 0:08:12.400 --> 0:08:16.680 see Brasilia accelerating GDP growth and in a positive environment 0:08:17.080 --> 0:08:19.800 going forward. And in the case of something like a leader, 0:08:20.080 --> 0:08:23.320 is that worth I mean, since the election, it's kind 0:08:23.320 --> 0:08:25.280 of gone flat. So people were buying the rumors so 0:08:25.400 --> 0:08:29.160 to speak. Um, but is is that over bought? In 0:08:29.160 --> 0:08:32.640 other words, when you're looking to play a single country 0:08:32.640 --> 0:08:36.240 like this, should you, um, you know, buy in after 0:08:36.280 --> 0:08:38.840 a rally like that or do you think the fundamental 0:08:38.880 --> 0:08:41.400 value of the stocks that you analyze are not really 0:08:42.160 --> 0:08:45.000 tied up to the pricing. Now that there was this 0:08:45.080 --> 0:08:48.040 sort of like top down buying because of an election. Well, 0:08:48.080 --> 0:08:50.880 I think the fundamentals of the companies are there, and 0:08:50.920 --> 0:08:53.120 I do believe there's still more opportunity. A lot of 0:08:53.120 --> 0:08:56.559 people are comparing Brazil would happened to Indian two thousand 0:08:56.640 --> 0:09:00.880 fourteen when Moody was elected president and the equity market 0:09:00.880 --> 0:09:03.440 had a really you know, big rally and the expectations 0:09:03.480 --> 0:09:07.720 of UH of economic growth and reforms. So I I 0:09:07.800 --> 0:09:10.640 do think that if the president do the right things, 0:09:10.640 --> 0:09:13.200 in particular on the fiscal side, UH, there's a lot 0:09:13.240 --> 0:09:16.440 of opportunities for Brazil going forward in terms of growth 0:09:16.760 --> 0:09:19.200 UM the conditions are already good there. I mean you 0:09:19.280 --> 0:09:22.040 see that in terms rates are low, you see low inflation, 0:09:22.080 --> 0:09:26.360 and you have seen some pickup in economic um UH 0:09:26.480 --> 0:09:29.200 numbers and also on labor market. So I do believe 0:09:29.240 --> 0:09:33.400 that under the right circumstances, with the right economic cabinet 0:09:33.480 --> 0:09:36.840 and with the right reforms, I really see Brazil I 0:09:36.840 --> 0:09:40.040 can really continue rerating and influence continue to come to 0:09:40.080 --> 0:09:43.719 the country. So with something like Brazil and at the neck, 0:09:43.840 --> 0:09:46.000 how do you guys try and get exposure if you 0:09:46.080 --> 0:09:48.440 if you like what you see, if you like those conditions. Yeah, 0:09:48.480 --> 0:09:51.240 on our particular case, we are we are very bottom up. 0:09:51.320 --> 0:09:54.480 Like we alla mentioned, we're on the active side. Uh 0:09:54.559 --> 0:09:57.319 So for us, it's very important to find companies when 0:09:57.360 --> 0:10:01.040 we we will see visible and structural and growth in profitability. 0:10:01.080 --> 0:10:04.280 And we continue to see that in many sectors within 0:10:04.360 --> 0:10:08.920 Brazil and education sector, healthcare sector, um and and like 0:10:09.040 --> 0:10:11.640 and like a beilieve evaluations are are still very reasonable. 0:10:12.120 --> 0:10:15.160 Uh So we we continue to find very good opportunities there. 0:10:15.360 --> 0:10:17.559 And if you look at Verdeck, I know you guys 0:10:17.600 --> 0:10:19.679 are on the active side, but Vanneck has a Brazil 0:10:20.280 --> 0:10:22.439 e t F. It's a small cap one the tickers 0:10:22.480 --> 0:10:25.760 b RF and I do find after when these elections 0:10:25.760 --> 0:10:27.840 are happening and they're sort of positive for the market, 0:10:28.280 --> 0:10:31.440 the small cap will zip up a little faster. Do 0:10:31.480 --> 0:10:34.080 you go and look at small caps too, because the big, 0:10:34.679 --> 0:10:37.280 the big single country e m ets tend to be 0:10:37.280 --> 0:10:39.760 dominated by the bank's financials and you've got to go 0:10:39.800 --> 0:10:41.760 down to the small caps to get a more broader 0:10:42.240 --> 0:10:45.320 swath of the economy. Is that right? Is that correct? 0:10:45.360 --> 0:10:48.440 Because usually, um, you know, the small cap are the 0:10:48.440 --> 0:10:51.560 ones that represent a lot of the smallest sector. I mean, 0:10:51.760 --> 0:10:54.959 like you said, the majority of the or the companies 0:10:54.960 --> 0:10:56.920 that have the largest way on the index, normally the banks, 0:10:56.920 --> 0:11:00.200 but also like Petro Brass or the ballast and and 0:11:00.240 --> 0:11:02.760 we've really find the opportunities are in in some of 0:11:02.800 --> 0:11:05.880 these small caps and like a small healthcare companies that 0:11:05.960 --> 0:11:09.839 are taking opportunity of of of the market, and or 0:11:10.000 --> 0:11:12.800 education companies like like I mentioned in the past. So 0:11:12.840 --> 0:11:15.439 I I do believe that a lot of the opportunities, 0:11:15.480 --> 0:11:19.800 specifically domestic opportunities are within the small caps. Although you 0:11:20.120 --> 0:11:22.480 definitely have to take something before you buy this because 0:11:22.480 --> 0:11:25.040 these things are volatile. Both the b Z and b 0:11:25.200 --> 0:11:27.920 RF are three or four times of altility of the 0:11:28.000 --> 0:11:31.080 smp FISMA. Is that what you take before you Yeah, 0:11:31.080 --> 0:11:32.559 you can get something over the counter. You don't have 0:11:32.559 --> 0:11:34.240 to go that you don't have to go you don't 0:11:34.240 --> 0:11:36.320 have to go on the streets for this. I mean 0:11:36.360 --> 0:11:39.280 it's not like bitcoin or vex, tivix or anything. Okay, 0:11:39.360 --> 0:11:41.000 but yeah, there's definitely a lot of about the stomach 0:11:41.000 --> 0:11:44.560 this vulatility. That's the downside, that's the that's the the 0:11:44.640 --> 0:11:47.480 cost to potentially get in the benefit from this, right, 0:11:47.520 --> 0:11:50.400 that's correct. Yeah, Well, the issues sometimes with some of 0:11:50.400 --> 0:11:52.800 these smaller caps of liquidity so that's why if you 0:11:52.800 --> 0:11:55.760 want to build a position or exit a position um 0:11:55.840 --> 0:11:59.280 with the lower liquidity, that trands to create more volatility. 0:11:59.320 --> 0:12:01.559 But like Petree you mentioned, if you are investing in 0:12:01.640 --> 0:12:03.960 emerging markets and you know, as we talked about, with 0:12:04.040 --> 0:12:07.400 favorable demographics, you want to get exposure to some of 0:12:07.440 --> 0:12:11.320 these more domestic themes because even though they're smaller companies, 0:12:11.360 --> 0:12:14.360 they tend to probably offer better valuations and higher growth 0:12:14.440 --> 0:12:17.360 over time UM and they tend to be less correlated 0:12:17.400 --> 0:12:20.360 with global events. So if you take Petrow Brass, that's 0:12:20.520 --> 0:12:23.400 really moving much more with the you know, global commodity 0:12:23.440 --> 0:12:27.360 cycle rather than with the fundamentals of Brazil domestically. So 0:12:27.720 --> 0:12:29.839 I mean that's why we we tend to find more 0:12:29.920 --> 0:12:34.000 interesting ideas and also less um covered some more unique, 0:12:34.040 --> 0:12:37.280 adducing cractic ideas in the smaller and medium cap space. 0:12:38.000 --> 0:12:40.320 How long will you hold a position in someplace like 0:12:40.360 --> 0:12:43.440 this where there is this much volatility, you see that 0:12:43.440 --> 0:12:47.000 there's opportunity, How long will you bury in the hold 0:12:47.000 --> 0:12:49.920 on the something that you believe in? Oh, I mean 0:12:49.960 --> 0:12:54.040 we're long term investors, and when their structure growth and 0:12:54.040 --> 0:12:56.720 and especially like the small cap that are in in 0:12:56.720 --> 0:13:00.480 in sectors that are more domestic. Um. You know, usually 0:13:00.559 --> 0:13:03.920 they're UM. Irrespective of what is happening in the country, 0:13:03.920 --> 0:13:07.320 we continue to see a very good growth. So you know, 0:13:07.360 --> 0:13:09.480 if the fundamentals of the companies are there and we 0:13:09.520 --> 0:13:12.240 continue to see that, definitely we were long term investor, 0:13:12.360 --> 0:13:16.240 unless unless the story change and you know, then that's 0:13:16.280 --> 0:13:18.960 a different situation. But and when you see long term, 0:13:18.960 --> 0:13:21.040 what's that horizon look like for you? It can be 0:13:21.160 --> 0:13:24.240 up to a one three years or definitely well, you 0:13:24.280 --> 0:13:26.880 know Gunlock said by India and don't look at your 0:13:26.880 --> 0:13:30.080 statement for thirty years, So there's there's a long long 0:13:30.160 --> 0:13:32.000 term Definitely, that's definitely a way to deal with the 0:13:32.040 --> 0:13:34.280 votility because you just don't look at it. Um. But 0:13:34.320 --> 0:13:36.800 you have to really commit to the country. In your case, 0:13:36.800 --> 0:13:39.560 you're you're one to three years long term for you. UM. 0:13:39.600 --> 0:13:42.880 And in the case of Brazil, did the election confirm 0:13:42.960 --> 0:13:44.800 what you already knew or did it actually like make 0:13:44.840 --> 0:13:47.440 you buy a little more of the country. Oh well, 0:13:47.640 --> 0:13:51.559 definitely were more positive um than now. We gotta oppress 0:13:51.679 --> 0:13:55.000 then and it's more market friendly. There are still uncertainties 0:13:55.120 --> 0:13:57.360 because I mean his his brand new he's somebody that 0:13:57.480 --> 0:14:02.240 is rather a way to the right, so we don't 0:14:02.240 --> 0:14:05.720 that's right. This is like the farthest right has done 0:14:05.920 --> 0:14:08.920 is a former military So we don't know what really 0:14:09.000 --> 0:14:12.880 can happen. We have good expectations and we're waiting to 0:14:12.880 --> 0:14:15.200 see what kind of cabinets he will have and you know, 0:14:15.200 --> 0:14:16.679 what are the kind of policies that he would put 0:14:16.720 --> 0:14:18.880 in place. But definitely so Brazil is not the only 0:14:18.920 --> 0:14:21.400 country in South America. We talk about the rest of 0:14:21.400 --> 0:14:26.080 the gun. Yeah, another interesting country. I think we can 0:14:26.120 --> 0:14:28.240 we can talk about it. They also have a very 0:14:28.280 --> 0:14:31.400 interesting but it's a small country. A lot of people 0:14:31.480 --> 0:14:34.360 don't look at it. Uh, it's a small part of 0:14:34.360 --> 0:14:35.640 the m c I and this part is a very 0:14:35.640 --> 0:14:38.160 interesting country. Is the fastest growing, one of the fastest 0:14:38.200 --> 0:14:41.120 growing in the region. It's actually a really interesting one 0:14:41.200 --> 0:14:44.120 in relation to the ms c I index because it 0:14:44.240 --> 0:14:47.520 didn't get down, like the percentage dedicated to the index 0:14:47.600 --> 0:14:51.240 in Peru shrunk traumatical well, because they didn't have enough. 0:14:51.360 --> 0:14:54.480 The liquidity that the market cap is is not that big. 0:14:54.480 --> 0:14:56.800 It's not that big, that's correct. I mean the largest 0:14:57.000 --> 0:14:59.800 constituent is a credit card, which is the largest bank there. 0:14:59.800 --> 0:15:01.520 And the you have another couple of company, who is 0:15:01.560 --> 0:15:04.560 this Southern copper and when I went to but yeah, 0:15:04.600 --> 0:15:08.000 definitely there's not a lot of name within the you know, 0:15:08.080 --> 0:15:12.080 the whole basketball metaphor with freshman to JV to varsity. 0:15:12.160 --> 0:15:14.040 Sometimes a country can be a big deal on the 0:15:14.040 --> 0:15:16.480 freshman team and then when it gets promoted, it's like 0:15:16.640 --> 0:15:19.320 ninth man on JV. And that is Peru. It's only 0:15:19.360 --> 0:15:23.200 point four four percent in the MSc Emerging Markets. Israel 0:15:23.280 --> 0:15:25.720 is a good example that dominated the emerging markets, not dominated, 0:15:25.720 --> 0:15:28.080 but it had a good waiting and it's basically lost 0:15:28.120 --> 0:15:31.920 now in the developed world. Um, but what's interesting is EPU, 0:15:32.000 --> 0:15:34.680 which is the I shares Peru ETF listen to returns 0:15:34.680 --> 0:15:37.920 on this it's up six in three years. The SMP 0:15:38.080 --> 0:15:40.120 is up thirty six, and the Emerging Markets Index as 0:15:40.120 --> 0:15:43.760 a hole's up six. So Peru s and yeah and 0:15:43.760 --> 0:15:46.760 tripled its own index. So in these cases you kind 0:15:46.760 --> 0:15:48.320 of have to use a single country, right if you 0:15:48.320 --> 0:15:50.000 want to get exposure. And why is it up that much? 0:15:50.000 --> 0:15:52.440 What's going on? When we look at Peru, it's a 0:15:52.480 --> 0:15:55.880 country that depends a lot of metal prices for their growth, 0:15:55.920 --> 0:15:58.120 and I mean you can see that their second largest 0:15:58.120 --> 0:16:01.680 producer of copper, silver, the third largest producer of sink. 0:16:01.800 --> 0:16:05.440 They also produced gold. So, I mean metal prices has 0:16:05.480 --> 0:16:08.240 been in a very good recovery and that have really 0:16:08.280 --> 0:16:10.840 helped their GDP on the growth. And when we look 0:16:10.880 --> 0:16:12.880 at at the index, a lot of the companies are 0:16:13.240 --> 0:16:17.360 commodity companies UM, so definitely they have had a good performance. 0:16:17.680 --> 0:16:19.840 So if PREW has been a bright spot, and especially 0:16:20.560 --> 0:16:24.000 bright spot, what's been not so bright Well that's the 0:16:24.040 --> 0:16:28.200 case of Argentina. Argentina is a completely different case. Actually, 0:16:28.240 --> 0:16:30.840 back in June, the m S A I in this 0:16:31.200 --> 0:16:34.280 UM included Argentina, which was a big deal. It was 0:16:34.320 --> 0:16:36.440 a big deal. It was a big deal, but unfortunately 0:16:36.520 --> 0:16:39.200 it came during a time of a lot of volatility 0:16:39.240 --> 0:16:42.680 for for for Argentina. You know, the changes that they 0:16:42.680 --> 0:16:47.240 were happening global and domestically really made Argentina in a 0:16:47.360 --> 0:16:50.160 very vulnumber of state. I mean it's a country with 0:16:50.240 --> 0:16:54.480 a high twin deficits and you know, like tier global liquidity, 0:16:54.560 --> 0:16:56.960 they had a drought, all the things, you know, created 0:16:57.000 --> 0:16:59.080 the perfect storm for them at the same time that 0:16:59.280 --> 0:17:03.200 they were being upgraded or graduating for you know, to 0:17:03.200 --> 0:17:06.000 to the emerging market. This thing is down thirty this year, 0:17:06.680 --> 0:17:09.600 which is the year it got promoted, right, Yeah, that's correct. Well, 0:17:09.640 --> 0:17:12.680 they they announced that they will be promoted, so yeah, 0:17:12.720 --> 0:17:15.240 usually it takes like six six months when with the 0:17:15.200 --> 0:17:18.159 announcement back in June May June this year, Yeah, it 0:17:18.160 --> 0:17:21.480 didn't really do much. This this is and that's you know, 0:17:21.520 --> 0:17:23.639 this is why some people do try to play that 0:17:23.720 --> 0:17:27.000 promotion because they're anticipating all this foreign capital coming in. 0:17:27.600 --> 0:17:29.800 But it doesn't always work. There are macro issues that 0:17:29.840 --> 0:17:31.840 which can trump that game. And if there's one place 0:17:31.880 --> 0:17:34.600 that foreign capital has reservations about, it tends to be 0:17:34.600 --> 0:17:38.280 a Yeah, there has been a rollercoaster Argentina over the years. 0:17:38.520 --> 0:17:41.439 So as an investor, who can you know, look at 0:17:41.440 --> 0:17:44.280 a continent like this and see that Brazil has this 0:17:44.359 --> 0:17:51.080 long term opportunity, Peru's having out performance, Argentina's um not 0:17:51.080 --> 0:17:53.520 not doing as well as as you might want. How 0:17:53.560 --> 0:17:57.720 do you put put your thesis together based on those factors? Well, 0:17:57.840 --> 0:18:01.920 definitely there there's more postive macro news in like in 0:18:02.000 --> 0:18:04.240 Peru and Brazil. But in the case of Argentina, I 0:18:04.240 --> 0:18:06.840 mean we saw that under this situation that were able 0:18:06.920 --> 0:18:09.560 to um uh have find a loan from the i 0:18:09.720 --> 0:18:13.480 m F for over fifty billion, which we really cover 0:18:13.520 --> 0:18:15.680 a lot out of the financing needs or a few 0:18:15.760 --> 0:18:18.960 over the next few years. And they're doing the reforms 0:18:18.960 --> 0:18:21.000 I mean around right now. We've started to see some 0:18:21.200 --> 0:18:25.520 stability on the currency and and expectations are that hopefully 0:18:25.560 --> 0:18:29.600 things will get better. But there's another issue that all 0:18:29.640 --> 0:18:33.160 this is happening at the time when presidential elections will 0:18:33.160 --> 0:18:36.280 occur next year, so definitely we don't know what could 0:18:36.320 --> 0:18:38.400 happen in that sense. There can be a lot of volatility, 0:18:38.520 --> 0:18:42.560 in particular that thinking that they all uh political party, 0:18:42.800 --> 0:18:44.920 the curisioners of the Petal News that you know, will 0:18:44.960 --> 0:18:48.760 come back to power. But there are opportunities and and Argentina, 0:18:48.760 --> 0:18:50.920 I mean it's it's a country in particular when you look, 0:18:51.320 --> 0:18:54.640 uh demographic is very good, there's a high middle class 0:18:54.680 --> 0:18:59.280 and and very low pennetuation of banking. So opportunities are 0:18:59.320 --> 0:19:01.640 there just on the on the you know, better environment, 0:19:01.680 --> 0:19:03.359 or at least see that things starting to move in 0:19:03.359 --> 0:19:12.000 the right direction. Okay, I want to turn the globe slightly, 0:19:12.280 --> 0:19:15.120 and we're gonna turn from South America to Asia. There's 0:19:15.160 --> 0:19:17.399 one country in particular, I want to talk about in Asia, 0:19:17.440 --> 0:19:21.919 which is South Korea, and South Korea is classified as 0:19:21.920 --> 0:19:25.760 an emerging market and it's been stuck there. Eric, it's 0:19:25.800 --> 0:19:28.560 like perpetual JV. It's like the guy who can't get 0:19:29.119 --> 0:19:31.719 onto the varsity squad. What's going on there? Yes, so 0:19:31.720 --> 0:19:35.119 South Korea is considered developed in the foot see line 0:19:35.119 --> 0:19:36.840 of indexes, but in the M S c I it's 0:19:36.880 --> 0:19:40.360 still emerging. It's the rare country that has different views there, 0:19:40.760 --> 0:19:43.600 but most people use MS, so they considered emerging. And 0:19:44.000 --> 0:19:45.720 the reason it's still there. Remember we talked about this 0:19:45.720 --> 0:19:48.400 a couple of weeks ago and we weren't sure. Um 0:19:48.440 --> 0:19:50.040 I got a tweet and I'll give this guy credit 0:19:50.119 --> 0:19:53.000 quant of Asia. He's actually a good follow Um. He says. 0:19:53.000 --> 0:19:55.080 South Korea is still considered an emerging market because of 0:19:55.119 --> 0:20:00.280 capital controls and investor I D requirements can't buy REA 0:20:00.320 --> 0:20:04.600 stocks um in certain ways. So I think that's it's 0:20:04.640 --> 0:20:08.760 not the country itself, it's these regulations and controls which 0:20:08.800 --> 0:20:11.840 is holding it back. So what are the other Asia 0:20:12.359 --> 0:20:15.200 E t F that you keep an eye on, Well, 0:20:15.240 --> 0:20:17.640 Taiwan that's that's one of the bigger ones. That's an 0:20:17.640 --> 0:20:20.840 eleven percent waiting in the emerging market. So for most investors, 0:20:20.880 --> 0:20:23.960 they're getting plenty of Taiwan in their broad one UM. 0:20:24.000 --> 0:20:26.359 But then you know, you've got countries that have less waiting, 0:20:26.440 --> 0:20:30.639 like a Vietnam that is very underrepresented in UM a 0:20:30.640 --> 0:20:33.760 lot of these indexes, and there is a market Vectors 0:20:33.800 --> 0:20:38.480 has the Vietnam ETF which is million actually, but there's 0:20:38.560 --> 0:20:41.080 UM it's such a hard country to get to get 0:20:41.160 --> 0:20:44.240 local shares in that. I believe you guys limit creations 0:20:44.320 --> 0:20:47.080 now and then because like if there's a rush of creations, 0:20:47.119 --> 0:20:49.040