What is your opinion on emerging markets?
Olaf S., Zurich
Emerging markets remind me of my ex-wife Bharati: they look very attractive at first, but beware! Because long-term performance is not always quite up to snuff. Appearances can be deceiving. You need to dig in and do some in-depth analysis from all sorts of angles before you get involved in anything serious.
Take Brazil, for instance. Year after year, this country has had non-stop growth and double-digit stock market returns. They’re getting ready to host two of the biggest sporting events of the decade (apart from the Cricket World Cup, of course). They have conquered the planet with their suave music, lime-flavored cocktails and cheesy TV-series.
But let us be realistic, my friends. I smell something fishy, and it is not just burnt cars and stinky favelas. I see a currency that has been on a roller coaster for the past three years. I see bossanomics going seriously out of tune.When the black magic fades, I think we are going to have low growth, high inflation, and gazillions of people out on the streets. It will be like carnival all year round.
Now if you please, look at India. We are cleaning up our slums and giving the country’s infrastructure a big boost. We are growing twice as fast as Brazil. The OECD forecasts our growth at 5.2% for 2014-2015. We have large forex reserves and credible monetary policy. Above all, we enjoy solid democracy in India: it is China without the whips and chains.
So call me biased if you want, but I have got my mind made up. If you are looking for a safe economic environment with good return on investment, then come to Delhi or Mumbai. You will not be disappointed. But if you want to wiggle to samba music with glitter in your hair and toucan feathers up your bum, then Copacabana is a better place to go. Who knows, you might even find a wife.