Is there a way to Invest in a Geo-Politically Neutral Way in the Global South?
Our Approach to Addressing Geo-Political Risks in our Investing
Investing in today’s environment is getting increasingly challenging, given volatile markets and geo-political risks. With the rise of the “Global South” versus the “West”, are there geo-politically neutral ways for investors globally and especially in the “West” to invest in the Global South?
We think yes and we are factoring these neutral ways into our model portfolios on an on-going basis, addressing the geo-political risks.
In particular, we want to minimize the big geo-political risk of getting our investment holding “frozen” or “confiscated” such as what happened with investors holding the public-exchange listed equities of Russian ETFs and Russia company ADRs for example.
One of our Most Admired Advisors (MAA) Louis-Vincent Gave in a recent podcast (by Payne Capital - see below) makes a few interesting observations.
Louis highlights equities in Latin America. We like this asset class as one class of solution to the question of investing in the Global South, as Latin American companies are generally neutral and doing business with the “West” and with the “Global South” together.
In addition to the Latin American equities class of investment holdings, we also like Louis’ highlight of investing in politically neutral companies which may have one or more of these type of characteristics below. Another of our Most Admired Advisors (MAA) Dr. Marc Faber also highlights this class of “neutral” investment holdings as well.
companies listed for example on exchanges such as in Singapore, Malaysia, Thailand, Indonesia, Kazakhstan, Brazil, Colombia, Chile
companies not domiciled in China or Russia but with reasonable-sized business operations in various areas of the Global South
companies with some business in China that are listed on exchanges in various jurisdictions
“The world of tomorrow could easily see a number of investors who’ve said “I’m doing anything but China” start to accumulate HSBC … start to accumulate AIA … start to accumulate Standard Chartered because like this they say oh look oh yeah in their fact sheet they'll say I'm 15% England 15% in the UK the 15% being 5% HSBC, 5% Standard Chartered - no China here I'm all good .. so I think this will be the workaround … businesses that are listed in Hong Kong that have an Asia business that have a China business but aren't legally Chinese companies I think will end up trading at a big premium for the very reason you highlighted outside of China … I think right now the the biggest slam dunk for me is in LatinAmerica.” - Louis-Vincent Gave - see podcast below (source - Payne Capital)
Given these investment asset holdings as potential solutions for consideration to address geo-political risks in investments, here are some holdings which are either currently in our portfolios or are seriously being considered to be added to our portfolios …
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