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John Derrick, U.S. Global Investors director of research, on emerging markets' great start to the year, and what countries are having the biggest impa...
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Mind boggling remains in.
While emerging market stocks they're off to their strongest garden probably since 2001.
-- my next guest says that this rally is not just about China by the way joining me now John Derrick.
Director of research for US global investors John.
We always thought I'd talk about China but we also talked in the past about break nations and they're playing a big role in this -- well.
Yeah definitely I think judge in this particular case I think Russia is particularly interesting in the current environment I think really the story is is that we're at -- early stages of a global easing cycle we saw.
That the ECB with their health Euro program back in December run up another tranche of that I think that was very significant.
It's not all that much different -- the first QE back in 2009 from the Fed.
And then you know just like Dell yesterday the day before we -- the Bank of England -- -- -- afternoon additional -- of another eighty billion.
And that's on top of rate cuts in places like Russia or China.
India Brazil -- that are either rate cuts to reserve rate requirements so I think you're you're at the early stage of a very positive cycle for emerging markets in general.
So for the audience a -- a semi coming from.
All of this money sloshing around him being printed.
Means that commodities go up a rush obviously being very rich in commodities.
Should be a beneficiary but here's my problem.
Our blog Russia for over a decade -- make money -- -- that I got crushed because of a guy named Vladimir Putin.
Who by the way is gonna -- the top you know political position there.
He's scares me about being in -- -- of their -- doesn't -- you.
Well I think you have to understand there are political risk obviously investing in Russia would have an election coming up and then little bit less than a month it's very likely he's going to be the the next president for the next six years.
But I think what that means is it's going to be a little bit more the same you know there's obviously been some more political opposition this go -- that's been.
That's that's that's been very vocal.
But actually I think that's a good thing it's been able you know protests have been able to go on they've they've been peaceful people -- -- To say what they needed this and it seems like Vladimir Putin is gonna move toward the middle just a little bit to try to accommodate some of those people.
So actually I think it over the next month and actually give you an opportunity to pick up Russia to take advantage of some of these other -- macro factors.
That are also -- look like yesterday John ninety's although he had a meeting told the tycoons have to legitimize this honest fortunes.
With the water off windfall payment now it did does sound eerily familiar took western politicians but also.
Connecticut will lead to storms some sort of power grab more than government itself SARS -- take some of these companies -- -- stakes in them.
Now I don't think so actually I think what it will do is I think it will actually legitimize.
Those who some of the oligarchs -- some some of the businesses that there and so if there's a one off payment.
It actually might be able to -- -- you can move move beyond that now because it's a recurring theme that that has come up over time about how.
You know some of these individuals kind of you know stole some of the estate assets I think -- -- -- wanna just to go take a bigger part of think they were just -- take it I think this is actually a positive step for the capital markets because I think it will eventually.
Clear overhang on some of these know maybe in the very near term there may be risk for some individual companies.
They may have you know payouts in the government but then I think didn't you know you can move forward from there.
And I didn't thank -- that they've actually adopted otherwise some pro business pro growth policies in Russia is on fire what other.
What other countries do you like emerging countries you like that that our viewers -- always hear all the time.
-- you know I think I think the whole eastern European area I think is -- area right now I think you know if you go back to throughput on Russia you know Russia trades at about six and a half times earnings so there are political risk and all those things.
But you know interest in about six and a half times earnings historically it's it's probably closer to about nine times earnings so -- you know from a valuation perspective looks attractive I think Poland's another area looks attractive -- about nine times earnings.
It's actually been a very consisting -- or actually was only country that grew through the recession murder two in 20089 -- positive GDP growth.
Continue to expect you know.
Mom -- low single digit growth to two and a half percent.
GDP growth in Poland I think it's an area that's awful lot of people's radar that if -- -- -- actually kinda get some things right and start to improve some things I think Eastern Europe is gonna be well -- And have been officially I don't -- -- -- Europe dog Germany France -- got a call that that Turkey and Eastern Europe would get pneumonia.
But I -- more we get twenty seconds Turkey you like Turkey is well right.
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