Most of 2019 has had the spectre of a global downturn lurking in the background. Fears of the US-China trade war, the latter’s slowing economy, and other issues such as Brexit and a sluggish European economy, have contributed to a sense of gloom about the future.
Are there any bright spots to be had? Yes – but you have to look quite hard. Emerging markets offer pockets of appeal, despite their traditional status as a harbinger of the next economic peril. And within those markets, the likes of India and Indonesia, along with smaller neighbours like the Philippines, Bangladesh and Malaysia, look particularly appealing.
These countries have a key thing in common: demographics. They have young populations, full of working age people looking for livelihoods. That means the nations have growth potential, and don’t yet face the growing burden or demand for an expensive social safety net.
Contrary to the popular phrase, demographics don’t necessarily equal destiny, but they can certainly help. At a time when China’s labour force is already shrinking, it makes sense to consider the potential of countries with young, vigorous people to take over more of the world’s manufacturing.
That makes these nations appealing bets for investors with strong stomachs and an eye on the horizon. The performance of some of these nations is already notable. While the MSCI’s Emerging Market index offered annualised returns of 3.78% over the past 10 years, its India index provided 9.38%, its Indonesia index supplied 5.76% and its Philippines index offered a very healthy 10.07%.
True, not every emerging nation was a hit. The Vietnam index only supplied 1.01% over 10 years. But then again it provided 14.36% over three years (better than the Emerging Market Index 7.36%).
These figures reveal the complexity of emerging nations. They’re not known for their lack of drama and climate change will place stresses upon them too – but they also offer the prospect of strong and sustained growth. In today’s low-yield times, that’s not something to sniff at.
"[A private asset] is a bit like Schrodinger's cat – you don't know if it's alive or dead until you open the box. It's only when you're going begging for a price ... that you discover the real price of that asset."
Corrado Pistarino, chief investment officer of Foresters Friendly Society (a British mutual insurance provider), on one of the key problems with illiquid assets.
HAVING A BEEF WITH RENEWABLES
When the words ‘renewable energy’ are raised, it’s likely that images of wind turbines and solar panels spring to mind. That makes sense, as both are the most common forms of renewable power.
But they’re not the only ones. The Ecologist magazine offered up a bevy of other types of renewable power ideas that are being tried out (or at least dreamed up) from across the world.
First up: dance. Some Japanese nightclubs are trying out piezoelectricity – or an energy produced when pressure is applied to an object. The tech is applied to a club’s floor, and it can provide a useful source of power – especially during frenzied dance tracks. The concept is also being considered for pavements, offices and public transport.
Human beings don’t just expend energy with our movements, we also radiate it too. While we give off pretty small amounts of body heat – about 80 watts at rest – and it’s hard to capture much, it is possible to power wearable devices like watches. And large groups might be sufficient to help partly heat shopping centres.
That’s not all. Scientists are exploring the use of jellyfish (interesting luminescent qualities), algae (it has a higher heat content than sugar or corn) and alcohol waste (whiskey distilleries end up with a lot of spent grain that can be converted to energy).
Then there are cows. The bovines get a bad rep for being huge emitters of methane (fun fact: they emit more of the gas through belching than flatulence), but scientists are trying to work out how to harness some of this via ‘methane backpacks’. It might be best not to think about how the piping would work on one of those.
Human beings won’t give up drinking milk or alcohol any time soon, so these qualify as renewable energy sources. It’s worth raising a glass to the idea.
This Backchat was taken from our upcoming AsianInvestor Winter 2019 magazine, due out soon. Look out for the edition, which includes senior interviews with some of the world's leading CIOs.