Private Equity Gold Rush in China and India: What You Need to Know
Take the bullet train from Shenzhen to Guangzhou and you begin to understand how President Xi Jinping is turning China’s Pearl River Delta into the new Silicon Valley.
This gleaming white snake hurtles at 245km (152 miles) an hour across a vast landscape that’s 200 per cent productive – from densely packed office blocks to oxygenated fish farms and giant component factories.
Yet current productivity is a fraction of what President Xi has in mind. “Cutting-edge frontier technologies, modern engineering technologies and disruptive technologies” are all part of Xi’s five-year plan announced in a 3½ hour address to the National Congress earlier this month.
This region’s advanced infrastructure is already bowing under the strain of its growing middle class. Rock up to buy a train ticket at any station here and you’ll be set for disappointment. Seats sell out weeks in advance. Carriages with bunk beds for four people are converted into benches to squeeze in six.
It’s a similar story in the world’s second biggest population center, and not just on the railways. On the same day as President Xi became one of only three Chinese leaders to have his doctrine written into the constitution, under “Socialism with Chinese Characteristics,” Prime Minister Narendra Modi revealed his grand plan for sustaining this decade’s fastest growing major economy – a mantle stolen from China.
Modi’s raft of new economic policies include a $32 billion stimulus package to boost lending to the private sector. As in China, technology takes center stage. Modi has urged Indians recently to “start up and stand up,” to digitize their daily transactions and to focus on innovation.
Investors are flooding in. The US private equity giant KKR announced earlier this month that it has increased investment in Asian equities outside of Japan by 2 percentage points to 9 per cent in readiness for its expectation that Asia will account for a full 62 per cent of total global growth this decade.
Enter the Dragon
The value of private equity investments in India jumped by 182 per cent in the last quarter, according to data from Grant Thornton, while exits reached the highest level since 2009. According to the founder of Global Tech Advocates, a coalition of thousands of individuals connected with the tech sector, China is poised to overtake Silicon Valley as the world’s leading tech superpower in the next five years.
But caution is needed. With the entering dragon, many fingers are burnt through inadequate preparation, networks and knowledge. India’s unique social structure is among a range of complexities every investor needs to understand – yet too many don’t.
So, for a special #ExpertChat live discussion, we’re grouping three of the most experienced players in navigating private equity across China, India and the US. And you’re invited.
Bitcoin Days Are Numbered as Fed Moves Toward Tightening: #ExpertChat
To understand the future of crypto-currencies, follow the money supply.
Right now, bitcoin and other digital currencies are riding a wave of popular support, with little by way of caution from regulators. That will change, according to Jerome Booth, co-founder of Ashmore, the UK emerging markets investor with over $50 billion of assets under management, and our guest for OnFrontiers’ #ExpertChat this week.
In the past several years of quantitative easing – creating electronic money to buy government bonds and other financial assets to stimulate the economy – bitcoin has been helpful to the cause of encouraging spending, and so “of course central banks are very happy with crypto-currencies,” said Booth, author of Emerging Markets in an Upside Down World.
While in recent months the Federal Reserve has been gradually raising US interest rates, the real danger for users of digital currencies will come when the Fed shifts to a more aggressive tightening and the final axing of QE.
“Remember that just like the State has the monopoly on the legitimate use of force, so the central bank has the monopoly on the legitimate banning of all other currencies,” said Booth, who since Ashmore has created the New Sparta group of companies to invest in energy to high-growth technology, telecoms and media in emerging markets. “If they want to tighten, and at some point they will, I can easily see a scenario where bitcoin and others are simply banned.”
Gavin Serkin, co-presenter on the newly-launched Emerging Opportunities show on Share Radio, talks about covering financial opportunities in the “less reported” parts of the planet, the station moving to a national format and how PRs can help with the show’s variety of segments.
Firstly, could you give us an overview of what the new show is about?
Emerging Opportunities is the only show on radio dedicated to global emerging and frontier markets – focusing on the economies, politics and markets of Africa, Asia, Central & Eastern Europe, the Middle East and Latin America.
Who is the show aimed at?
Emerging Opportunities is aimed at anyone with an interest in finding out what’s going on in some of the less reported parts of the planet. Our ‘Boots on the Ground’ segment, for example, takes the listener directly to a country of focus that week. So far, we’ve been to Iraq, Iran, India, Myanmar, Cuba and even North Korea.
How do you strike the balance to appeal to investment professionals as well as a less financially-knowledgeable audience?
Which Way SA?
F.W. De Klerk Speaks Out
In a series of five interviews at the SuperReturn Africa conference in Cape Town, Gavin Serkin explores South Africa’s political turmoil, with the country’s Former President and Nobel Peace Prize recipient F.W. De Klerk; the challenge of economic cooperation between nations, with the UK’s former Africa Minister, Mark Simmonds; energy deals, with Africa Finance Corp.’s head of financial advisory, Ibrahim Sagna; financial inclusion through shipping crates, with the founder of Imhanya or “Do It Quickly!” Keban Patel; and behavioural economics, with Professor Dan Ariely, co-founder of Irrational Innovations.
Why you should think about investing in Afghanistan.read more
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Cooperation in opening its nuclear facilities to international inspectors had brought Iran to the brink of ending decades of economic sanctions – opening investors to opportunities in one of the world’s leading oil producing economies, with an active stock exchange...read more
Mark Krombas, head of Middle East and North African equities for the Qatar Insurance Company, and Talib Qayyum, independent consultant focused on frontier markets discuss President Trump’s impact on Middle East investment, market outlook and Saudi Aramco’s IPO.read more
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With all the twists and turns of 2016, from Brexit to Donald Trump, one country has stood out for its resilience: India. Yet despite expanding faster than any other major economy this year, the country more recently has fallen on tougher times – much of it due to the...read more
They’re exploring an industry that’s particularly critical in emerging markets: the raising of finance for gas and oil projects. The hosts speak with Andrew Moorfield, who is the head of natural resources at the investment bank, Exotix.read more
He might not be President yet, but investors have delivered their verdict on what’s in store for the rest of the world when Donald Trump moves into the White House. Last week saw the second largest outflow from emerging market bonds since 2002, halting this year’s rally across stock and bond markets.
So what should investors be doing at this point?
As the world absorbs the magnitude of change about to be unleashed by American President-elect Donald Trump, one constituency feeling particularly nervous is the green energy lobby. Trump has dismissed evidence of mankind’s impact on climate change as a “hoax” and President Obama’s Clean Power Plan to cut plant emissions as a “war on coal.”read more
We’re now less than a week away from the US election. With global markets swinging on an increasingly tight race, and with Europe convulsing on Brexit, many investors are wondering whether the risks might in fact be lower in emerging markets.read more
So, the ultimate investment question: how can you tell which markets around the world are going to rise or fall in the future? One way is to follow the money – to track the flow of investment in and out of markets. Sound obvious? It is to one of today’s guests Michael Howell, the Managing Director of Crossborder Capital, which monitors the flow of cash from central banks and other sources.
Well normally on this show we scour the ends of the earth for off-the-beaten track stock markets and bonds to buy. And this show is no different – except we’re focusing on real estate. Where’s the best place in the world to buy a property? That’s what Gavin has been asking one investor particularly suited to answer the question.
Lee Cashell is the Founder and CEO of Asia Pacific Investment Partners.read more
It’s received a fair bit of cynicism as the sucker’s rally according to one Reuters piece – sustained by a herd of dumb money, according to a CNBC report. But with the exception of a relatively small interruption last week, the record investment flooding into emerging markets in the past couple of months has shown little sign of ebbing, sustained by the seemingly never-ending near-zero interest rate policies of central banks in the developed world.read more
China is the emerging market the world has been watching this week as it played host to the G20 Summit. But it’s the US that’s continued to hold emerging market investors spellbound with Federal Reserve Chair Janet Yellen warning that the case had strengthened for a rise at long last in US interest rates – only to be contradicted in the eyes of some watchers by a disappointing US jobs report last week.read more
Well, one emerging market has been punching well above its weight in the news this month – and that’s Mongolia! Emerging Opportunities dived in to see what the country might offer investors, with plenty of analysis from people who have first-hand experience in the country – Gavin Serkin was joined in the studio by mining expert and consultant Layton Croft, intelligence analyst Renata Legierska & on the phone from Mongolia by Lee Cashell, the CEO of Asia Pacific Investment Partners.read more
As Canada prepared to host the world’s biggest gathering of athletes, the mayor of Montreal soothed that “the Olympics can no more have a deficit than a man can have a baby.”
Now, forty years on, we know that Montreal overran to the tune of 800% and every one of the games that followed blew the budget.read more
A year on from the first diplomatic relations between the US and Communist Cuba, how much has changed? Gavin Serkin interviews Professor Rodrigo Olivares-Caminal, the man appointed to lead negotiations between the Castro government and foreign investors for an insider’s view of how Cuba is evolving.read more