By NICO Omer Jonckheere, SE, MM

Investing In the Midst of an Economic Turmoil:

Opportunity or Challenge?

The 20 Fastest-Growing Economies This Year

Asia’s ascension will be led by 10 economies, which could account for 50 percent of global GDP by 2050.

China is no longer the LOW-COST ASIAN MANUFACTURER. That’s Indonesia, by far.

The MSCI emerging markets Index has gone absolutely nowhere for the last six years – a time frame during which the S&P 500 Index has doubled.

Have Emerging Markets Lost Their Edge?

U.S. equities are currently 70% more expensive than emerging market equities.

IHSG or JCI?

It should come as no surprise that fund managers’ positioning on EM relative to DM is the most extreme on record!

While relative to history, the space is under-owned – by a lot:

Based on Deutsche Bank’s valuation metrics, bonds and equities alone are at their highest ever combined valuations.

Emerging Market FX has been falling for 3 straight years…

INVESTMENT STRATEGY• The key is to look for cash flow, a reasonable dividend

payout, if you can find it, and growing fundamentals. Companies that exhibit those characteristics represent value. There are not many, but for those investors willing to do the homework, they exist.

• I remain positive towards those kinds of investments that will retain inflationary protection like infrastructure, real estate and other hard assets such as commodities.

• As Greg Fisher of Adepa Asset Management wrote, amid a world of worries, “Keeping the discipline of holding lowly valued, under-owned and unleveraged companies is likely to continue to protect our capital and earn us both income and capital appreciation over the longer term.”

• Or to put it more plainly, and in the words of Warren Buffett, “Price is what you pay; value is what you get.”

• Also stick to small-caps, which come with big advantages because of their size. Few analysts cover the smaller stocks on the market, and few mutual funds are even allowed to invest in them. That lack of professional awareness of small caps means that you are far more likely to run across a major mispricing or hidden opportunity in a small cap than you are in a larger name.

CONCLUSION

The DOLLAR is KING right now, but what’s undeniable is that global growth and massive wealth creation will occur

in Asia in the decades to come. And this CRISIS may be providing a great OPPORTUNITY to take advantage of that

trend.