This
past week, I attended three (3) SAIS events. They were all very interesting in their own
peculiar way.
1.
“Challenges
and Trends in Infrastructure Investing in Emerging Markets (Brazil)”
-
Mr.
Benjamin Sessions, Managing Director of Global Environment Fund and a SAIS
graduate.
2.
“Prudent
Development: Realizing the Potential of North America’s Abundant Gas and Oil
Reserves”
-
Mr.
Jan W. Mares, Senior Policy Advisor for Resources for the Future and former
U.S. Assistant Secretary of Commerce for Import Administrations.
3.
“Borderless
Economics: Chinese Sea Turtles, Indian Fridges and the New Fruits of Global
Capitalism”
-
Mr.
Robert Guest, Global Business editor of the “The Economist” and the author of “Borderless
Economics: Chinese Sea Turtles, Indian Fridges and the New Fruits of Global
Capitalism”.
The
one thing that stuck out to me was you must do your due diligence before making
any financial investment. For this blog,
I will only discuss the main take away from the “Challenges and Trends in Infrastructure Investing in
Emerging Markets” discussion.
Mr.
Sessions gave countless examples of when his company was receiving yearly 25% ROI
financial investments in Brazil but due to Brazilian government pressures the
firms ROI was reduced to 8%. Mr.
Sessions was hit with a real dilemma; he promised his investors he would make over
20% on the ROI, now he was only making 8%.
Mr. Sessions mentioned that when his company first started doing
business in Brazil, the government helped foster business relationships within
the country. Now, because Brazil is
getting a lot of foreign investors, and there is a new president in Brazil, the
business environment has changed. Mr.
Sessions stressed you must continuously do your due diligence to understand
both the macroeconomic and micro-economic factors in the region you are working
in. Global Environment Fund is looking
to do business in other countries in South America (i.e., Chile, Peru, and
Argentina) where business investments are more attractive.
Ben Brock
Ben, thanks for this blog. That situation is also what I want to address. Guess what? The same thing happend in China in the 1980s. At first, the government attracted foreign investors to come by providing priorities. But when they got enough capital, they kicked those investors out. As a foreign investor in emerging markets, you might take forever to understand the government regulation of this country. They are changing their their regulation and rules all the time, cuz they donnot have a mature market. This makes your investment more risky even in fundamental industry.
ReplyDeleteA better choice, I think, is doing some arbitrage in the emerging market. Their are more arbitrage opportunities in emerging financial market. A good stretagy is to capture those opportunities with large amount of capital and quantitative method.