Losses in Emerging Countries & Recent Commodities

The strategy for the current market cycle (2012-2015) did not involve emerging markets, which were the opportunity for the previous cycle (2008-2011, ROI +17% Portfolio Alpha, ROI +20% Portfolio Beta). More importantly if any portfolio was not switched or managed out of these markets there would have been substantial losses. These markets are at historic lows, and their currencies are extremely weak against the strong US dollar. Just on exchange rate alone, a portfolio exposed to these markets would incur significant losses.

We believe the emerging countries will not provide good positions if funds are used as a vehicle to capture any possible turn-around opportunity at this stage. The income of these countries mainly come from commodities, which are also at the lows in their cycles when valued against the strong dollar.

Click here to Download 2015-08 [News] Losses in Emerging Markets.pdf [222KB]

Best,
Michael

Fig 1: Emerging Market Currencies at historic lows

Fig 2: Commodities recent performance

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Losses in Emerging Countries & Recent Commodities

Losses in Emerging Countries & Recent Commodities

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