Conference Presentation, Panel
Investing in Growth: Opportunities in Developing Markets
- Emerging markets are projected to surpass developed markets in global GDP share with a sustained trend through the first half of the 21st century.
- A turbulent five-year period with single-digit returns is anticipated due to a zero risk-free rate environment, making double-digit gains difficult.
- A strong dollar is expected to persist driven by global quantitative easing strategies, while oil prices may dip to 40–45 in the near term before settling in a 55–75 range long-term.
- European securities trading at low 10-year levels imply a potential Eurozone collapse, posing a high risk of portfolio decimation.
- Latin American growth is bifurcated: Pacific nations (Colombia, Peru, Chile, Uruguay, Paraguay) are forecast to grow 3%–4% over the next five years with lower risk, while the "dark side" (Venezuela, Argentina, Bolivia, Ecuador) faces collapse, with Venezuela potentially defaulting within a year.
- Brazil requires a period of trust-building before a turnaround may be viable over a five-year horizon, with currency and valuations currently 30%–50% below recent levels.
- Latin American agricultural and oil commodity prices are expected to return to historical averages over the next two to three years, and infrastructure investments may offer returns multiples of government fixed income.
- Africa is projected to host eight of the ten fastest-growing economies driven by young workforces and genuine reforms, with non-resource nations leveraging digital banking innovation.
- China's state-owned enterprises are expected to target Africa for rail construction and product growth, while GE plans to expand assembly and service facilities in Ethiopia, Ghana, Mozambique, and Kenya.
- Peru is expected to continue issuing 20-year power purchase agreements for hydroelectric projects generating approximately 16% equity returns.
- Private equity funding faces potential liquidity constraints similar to 2008–2009, making private market investing riskier for inexperienced investors or those unable to withstand illiquidity.
- GE plans to divest capital market businesses, presenting a potential acquisition opportunity at non-economic prices.
- Significant internal changes in Cuba regarding private ownership are not expected within five years, even if the US embargo is lifted.
- Infrastructure power projects in emerging markets typically require five to seven years from development to grid connection, and countries like Nigeria may cut capital spending due to budget constraints.
- Risks in Latin America include expropriation and nationalizations in the power and oil sectors, particularly in Bolivia and Venezuela.