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Emerging Market Equity Markets: Outlook brightening




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The BRIC countries had a total of USD 260 billion in forex reserves at the time of the Russian debt crisis in 2000…today India by itself has more than that total. Total Reserves at the end of September totaled nearly $3 trillion…a substantial kitty with which to fight crisis and emergency situations.

Unless the global financial system comes to an end, and we all go into our separate corners to play for the foreseeable future, there will be a recovery. It may be V-shaped or U-shaped but there will be a recovery. I have lived through incredible debacles; this is not the first time that Citibank has gone bust…the LDC crisis did that in the 80’s.

The entire equity base of the Canadian banks was wiped out at that time…of course, deals were made with government to provision over years while providing tax relief for the entire loss immediately. A steep positively sloping yield curve, wider than normal spreads between deposits and loans for a few years and all was healthy and sound…and it was all blown away by the commercial real estate implosion of the late 80’s early 90’s.  Anyone remember Canary Wharf and Olympia&York.

The fact is we are now coming to the most taxing phase of this global financial disaster…the ‘there is no solution’, ‘things can only get worse’, ‘everybody take your toys and go home’, utter investor despondency and depression phase.

I bought Citi at $9 in 1982…and after splits..it means I bought for $1.10….and of course with LDC having blown everything away..the end was nigh.  So, the next few months will be a paradise for picking up good companies with good prospects…and you will have lots of time to analyze and decide.  It is time to get to work…do your analysis…it is hard work but it will pay-off.
The longer the doomsayers prognosticate the better…because, when they stop…the rush will be on…and I hate line-ups.

Remember, equity markets are a marathon…not a 100 meter dash.




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