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Emerging Markets – 2019 Review
From the North of South Capital team

Global Emerging Market equities finished the year on a strong note in December, with the fund returning 20.7% for 2019 – ahead of the MSCI Emerging Markets index by 2.3%. This marks the fourth consecutive year of outperformance and the sixth out of eight calendar years that North of South has been managing this long only strategy with a focus on Value. 

Latest Emerging Market Viewpoints
From the North of South Capital team

For the last few years, the world has been bracing itself for the IPO of what would surely become the largest listed corporation in the world. This was not going to be a high-growth technology stock and it wasn’t based in any of the world’s largest economies such as the US or China. It would be a distinctly old fashioned resource company, in the business of extracting oil.  

Latest Emerging Market Viewpoints
From the North of South Capital team

There has recently been much excitement about market rotation and a reversal of momentum. Since the end of August the S&P value index has indeed sharply outperformed the growth equivalent without much of a move in the broader market. This is a relatively rare occurrence in recent years and has led to some soul searching by strategists.  

Chris Nicholas, Head of UK Wholesale Fund Sales at Pacific Asset Management

When it comes to Pacific Asset Management’s Emerging Markets expertise, the Partners who manage the Pacific North of South EM All Cap (value) strategy sometimes do not get equal prominence when it comes to the sales and marketing effort. However, as an owner-operated, specialty EM boutique their process relies on the close collaboration of a tightly-knit team. 

Latest Emerging Market Viewpoints
From the North of South Capital team

Argentina: Never as good as it looks… but never as bad
Our mantra on Argentina is that it is never as good as it looks but also never as bad as it looks. We have reduced exposure to Argentina over the past few months as the markets increasingly priced in a certain Macri victory. 

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

The hunt for yield is back
Over the past nine months the world has changed dramatically. Towards the end of last summer, US 10 year bond yields were at 3.2% - levels almost recognizable to someone from a time before QE and ZIRP. German 10 year bond yields were low but clearly positive. Emerging markets were responding in ways that reflected their fundamental strengths and weaknesses – a collapse in Turkey and Argentina, steadily rising yields elsewhere. Normalization of interest rate policy was expected and asset prices were going to reflect this. 

Emerging Markets Webcast with North of South Capital
The Danger of the Monetary Illusion

Kamil Dimmich, Co-manager and Partner of North of South Capital was recently asked by Brooks MacDonald to participate in their latest webcast.

Kamil discusses the Monetary Illusion, a term made famous by John Maynard Keynes which describes the tendency of investors to fixate on higher nominal returns rather than focus on real returns. He explains why this is particularly true in some emerging markets and how it is possible to ensure you don’t fall foul of this common investor trap. 

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

Even before the current Mexican President Manuel Lopez Obrador (AMLO) had taken office, he and his party (Morena) caused a significant sell off in both the equity and currency markets. 

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

The last two occasions when the Chinese authorities decided to stimulate their economy, the result was a substantial increase in the prices for most commodities. This was particularly the case in 2009 in wake of the global financial crisis. Although the stimulus in 2015-16 was quite a bit smaller, it also had a very favourable impact on the price of commodities. 

Latest Emerging Market Viewpoints
From Matt Linsey and the North of South Capital team

Are Emerging Market equities becoming less risky in relation to developed markets? If one were to look purely at debt to GDP ratios, savings ratios, political stability and the level of domestic interest rates a fairly strong case could be made that our asset class looks as good, or better in a number of cases, than the U.S., Japan and Europe.