Greetings from London. Sally Limantour and I are in the UK this week for an emerging markets conference.
London is considered the most international city in the world – just slightly edging out New York – and one of the trendiest too. The world’s wealthy flock to London for the city life, the culture and exotic flavor… and the highly favorable tax treatment.
On “Billionaire’s Row,” a London street where the Saudi Royal Family owns multiple properties, a Turkish mansion just sold for £50 million (nearly US$100 million). That’s a record for a house that’s never been lived in. The buyer – a billionaire from Kazakhstan – plans £30 million or so worth of improvements. After all, what self-respecting tycoon makes do without a heliport?
And speaking of Kazakhstan, it’s interesting to note how heavily the London jet set is into oil, commodities and emerging markets. Along with finance – which is taking a hit now – those are where the real fortunes are being made.
Deal makers also appreciate London for its central location. Both geography and time zone convenience give the city an edge. Thor Björgólfsson, a private equity player with holdings in Eastern Europe, loves that he can fly his private jet anywhere in “three to five hours” and be home that night. (New York is five to seven hours flight time from London; so is Dubai. Moscow is only half that, and most of Europe is just a quick jaunt.)
The conference Sally and I are attending is called the “Emerging Markets Trade & Political Risk Forum.” Much of the discussion will be devoted to frontier markets – those countries far from Wall Street’s traditional line of sight. Selected areas of coverage include Latin America, Central Asia, Africa, Northern Africa and the Middle East.
There are fascinating (and sometimes a little bit frightening) things going on in all these out-of-the-way places. But in many cases, risk equals opportunity… if you know how to play it right. That’s more true nowadays than ever, as good investments get dumped along with the duds.
Frontier economies are the places where “next” is already happening – and where the excitement and profits are still rapidly growing. In the past few years, more than a few emerging markets tasted real prosperity for the first time. They aren’t about to give that up just because the West is going through a rough patch.
In other words, don’t let the front page of the paper get you down. A credit binge and bust in the United States doesn’t have to take the rest of the world down too. The U.S.-centric view of things is quietly shifting anyway; what’s happening now is just part and parcel of that inevitable process.
The big picture evidence for emerging markets is there. The new “tigers” (a nickname for fast-growth developing world countries) won’t be stuffed back in their cages so easily. You can see it in the wealth creation… you can see it in the consumption patterns… you can see it in the cash reserves. It really is set to be the “Emerging Markets Century,” as money manager Antoine van Agtmael argued in his book of the same name.
Andrew Mickey, editor of BreakAway Investor, has verified this phenomenon from the ground up. He’s just winding up a few weeks in Thailand and Southeast Asia – and he’s very excited by what he sees. Read on to find out why Andrew is convinced, as I am, that these tigers can't be caged.
Warm Regards,
JL