Profit in Emerging Markets: Why virtually nothing can stand in the way of the growing world economy

Picture this: you’re sitting in your favorite easy chair ready to take a break and see what’s on TV. It’s a mild September evening, and you’d like to check out how the networks are trying to top each other with another new reality series.

You turn on your TV. Nothing but fuzz. Flip the channel… same fuzz. Try a few more channels, same result.

“What’s going on?” You go behind the TV, jiggle some wires (the ones you swore you would remember which each one was connected to when you spent four hours assembling it all the first time)… no difference at all.

You decide to go outside and check to see if your cable is still connected to the main line. Before you can get three steps away from your TV, your neighbor starts pounding on your door.

“There are tanks running all through Washington, along with Hummers and armored personnel carriers too. It’s a coup,” he exclaims through the door.

Next thing you see is the TV fuzz disappearing as Miss America appears on your set. She tells you and other viewers there is nothing worry about. The military has overthrown the President, abolished the Constitution and disbanded Congress. And to top it all off, she breaks out her congenial side and apologizes for any inconvenience.

What would you do? Would you go into work the next day? The government has just been overthrown, would there be any work to do?

There would be a lot of questions to answer. Surely, the economy would grind to a screeching halt. What would happen to the markets? They’d get crushed. And the U.S. dollar… the downward spiral would accelerate faster than any of us could imagine.

Sounds pretty unrealistic, right?

Well… that’s exactly what happened in Thailand’s capital of Bangkok (right down to the Miss Thailand part). However, here we are 15 months later, and the bloodless coup has been long forgotten.

Profit in Emerging Markets: One Night in Bangkok

How could an economy survive such an event? I think the reason is pretty simple: the Thai people just don’t seem to care too much. It’s something I’ve never fully realized before, but the economy has completely separated from the government -- a rare feat in most economies, emerging or not.

Bottom line is, the Thai economy is growing, and there isn’t much anyone can do about it.

I’m not going to say that every person in Thailand is greedy, but it sure seems that way. When stopping in at one of the countless number of shops, the aggressive salespeople could all too easily identify your editor’s six foot two inch tall frame sticking out well above the crowd. I could see the excitement in their eyes.

A tourist! Or better yet, someone that will pay a lot for knock-off Louis Vuitton handbags and other “name-brand” goods. Then the negotiations begin (a wonderful experience filled with some of the most dramatic acting I’ve ever seen).

But that’s just how Thailand is: everyone is out for themselves. Isn’t that how the U.S. was a hundred years ago… or even as recently as 30 or 40 years ago? Can’t every successful entrepreneur think of the time when they worked a minimum wage job to make ends meet?

Profit in Emerging Markets: Can’t Be Thai’d Down

It’s all an amazing transition when you think about it. Just ten years ago, Thailand kicked off the Asian financial crisis. When the Thai baht broke off its dollar peg, Thailand’s economy fell apart and brought down the economies of Indonesia, South Korea, Hong Kong, Malaysia, Laos and the Philippines along with it.

The IMF pumped $40 billion into the region ($20.9 billion specifically went to Thailand) to rescue them, and it’s been nothing but good times since.

After averaging annual GDP growth of 9% from 1970 to 1997, Thailand got right back on track after the currency crisis. The 9th largest economy in Asia has tallied GDP growth between 7-9% every year since 1999. That even includes the aftermath of the coup.

And it’s not just Thailand -- virtually every other Asian Tiger economy is experiencing the same kind of rebounding growth.

Clearly, these economies are resilient… to say the least. That’s the biggest reason why these economies will continue to thrive while the U.S. economy heads into recession.

Don’t get me wrong, there are going to be some growing pains. But the decoupling is coming. It might take six months or a year, or maybe even longer. But it is coming. These economies are simply too resilient, plain and simple.

The world has changed and these growing economies are going to continue to propel the commodity boom. The next four to six months are going to be rough as the U.S. falls into recession, the world economies continue to grow and Wall Street waits on the sidelines. That’s what Wall Street is notorious for doing during times of perceived uncertainty. But I firmly believe that the next few months will be a time of great buying opportunities that seem to come along once every five or ten years.