It’s Blue Skies for the 5 Largest Emerging Market Aluminum Producers as China Cuts Output

Blue skies for aluminum producers

In line with its blue skies program, China (FXI) passed an “Air Pollution Control” regulation earlier this year which required aluminum producers in the four provinces around Beijing to cut aluminum output. The move is targeted towards reducing pollution and stabilizing the market. Smelters and aluminum refineries were mandated to implement cuts of at least 30%. Accordingly, the Asian (AAXJ) (VPL) country is estimated to cut around 3-4 million tonnes of aluminum capacity by the end of 2017. Since China is the world leader in aluminum production (chart below), the move is impacting market dynamics and prices for this base metal.

The price of aluminum has been treading north

Meanwhile, the price of aluminum is already treading north (see chart below) and is likely to continue, at least over the medium term.

This is bad news for the automotive sector being that they are one of the key drivers of global aluminum demand. Most equipment manufacturers and auto body producers are located in developed markets (EFA) (VEA). So, while auto parts makers stand to face dark clouds, aluminium producers have blue skies, as they benefit from the rise in the price of their product.

The largest aluminium producers in the emerging markets

Here’s a list of the five largest aluminum producers located in emerging markets (EEM) (VWO):

  1. UC Rusal (Russia)
  2. China Hongqiao Group Ltd. (China)
  3. Aluminium Corp. of China (China)
  4. China Power Investment Corp. (China)
  5. Shandong Xinfa Aluminium & Electricity Group Ltd. (China)

United Company RUSAL (RUSAL.PA), Up 33% YTD

The world’s largest primary aluminum producer based out of Russia (RSX), UC Rusal, produced a total of 3.7 million tonnes of aluminum in 2016. The company was formed by the merger of RUSAL, SUAL, and the alumina assets of Glencore (GLNCY) in March 2007. Currently, it accounts for almost 9% of the world’s primary aluminum output and 9% of the world’s alumina production.

The company’s GDR currently trades at the Euronext Paris Exchange under the ticker RUSAL. The GDR is up 33.2% on a YTD basis and commands a market cap over $9 billion (as of November 20). In the FY2016, the company reported an ROA (return on assets) of 8.65% and an EBITDA margin of 19.05%. The company’s revenue sources are spread across Asian and European countries with the Netherlands accounting for 28.6%, followed by Russia at 19.7%. 82.2% of the company’s long-term assets are located in Russia.

China Hongqiao Group Ltd. (1378.HK), Up 39% YTD

The Shandong province-based China Hongqiao Group Ltd. is one of the largest (as of 2016) and lowest-cost aluminum producers in the world with a combined annual capacity of 3.61 million tonnes.

The company’s stock currently trades at the Hong Kong Stock Exchange under the ticker 1378. The stock is up 39.3% on a YTD basis and commands a market cap of about $69 billion (as of November 20). The stock currently trades at a P/E of 11.54. Estimated forward P/E for the stock stands at 8.13. In the FY2016, the company reported an ROA (return on assets) of 3.6% and an EBITDA margin of 30.1%. The company’s revenue sources and long-term assets are concentrated in China. The stock has 50% BUY recommendations and 50% HOLD recommendations from the 6 analysts that reviewed the stock.

Aluminum Corp. of China (ACH) (2600.HK), Up 58% YTD

China’s state-backed producer Aluminum Corporation of China Limited (aka Chalco) used to be the largest refined metal maker in China until China Hongqiao Group overtook it in 2015. Chalco produces about 3.31 million tonnes of aluminum annually.

The NYSE-listed ADR of the company trades under the ticker of ACH and commands a market cap of $12.9 billion. The company’s stock also trades at the Hong Kong Stock Exchange under the ticker 2600. The stock is up 58.44% YTD and commands a market cap of $98.2 billion (as of November 20). The stock currently trades at a P/E of 58.9. Estimated forward P/E for the stock stands at 25.5. In the FY2016, the company reported an ROA (return on assets) of 0.21% and an EBITDA margin of 8.9%. The company’s revenue sources and long-term assets are majorly concentrated in China. The stock has 53.3% BUY recommendations, 33.3% HOLD recommendations, and 13.3% SELL recommendations from the 15 analysts that reviewed the stock.

China Power Investment Corp.

China Power Investment Corporation (CPI) is one of the five largest gencos (generation companies) in China and a comprehensive energy group integrating industries of power, coal, aluminum, railway, and port. The company has an alumina refinery capacity of 2.6 million tonnes. The company’s stock is not listed on any exchange. In July 2015, the company was merged with the State Nuclear Power Technology Corporation (SNPTC) to form State Power Investment Corporation (SPIC).

Shandong Xinfa Aluminium & Electricity Group Ltd.

Shandong Xinfa is another privately held large-scale enterprise group in China. The company has an aluminum production capacity of about 1.63 million tonnes.

While above is a list of the largest aluminum producers based out of the emerging markets, UK’s Rio Tinto (RIO) and US’s Alcoa (AA) count among the notable developed market (EFA) (VEA) based producers of aluminum.

Will These Two Emerging Countries Continue To See Easy Monetary Policy In 2018?

South Africa

Unlike some other countries in this review, rate cuts in South Africa later this year, and going into 2018 are much more uncertain.

The sole rate cut effected in July this year was aimed at stimulating the economy, and a dip in inflation supported the 25 basis point reduction.

Similar to the situation in Brazil, risks emanating from political developments can be expected to drive financial markets until the 54th National Conference of the ruling African National Congress in December.

The South African Reserve Bank sees upside risks to inflation due to an electricity tariff increase and maintains that monetary policy alone may not be enough to stimulate growth in light of the political uncertainty.

However, in its September monetary policy statement, the picture painted by the central bank forces one to believe that the authorities may cut rates. Particularly if its views on inflation remain in the expected range with some headroom, consumer spending remains constrained after rebounding in Q2 2017, and credit extension to the private sector continues to decline, among other aspects.

Moreover, if rating agencies cut the country’s ratings further, the central bank may need to reduce its policy rate even in the face of political uncertainty.

Investors have continued to pile into South Africa bonds even in the face of political challenges and rating cuts; a small rating cut may not deter them given the still large spread between South African bonds and US Treasuries. Depending on the political situation, it may help infuse some confidence in the country and resuscitate private investment.


Indonesia has surprised markets both times that it has slashed rates this year. Its moves were aimed at stimulating a stagnating economy which has been stuck at about 5% growth for the past four quarters. Bank Indonesia is hoping that the rate cuts will reignite bank lending.

Going forward, the central bank would first want to assess the impact of these two cuts on inflation and growth in economic output. A few more reductions may be in the offing if inflation remains within the target range of 4% plus/minus 1% for 2017 and 3.5% plus/minus 1% for 2018.

Indonesian bonds have been attractive in 2017 given their yields. However, as shown by the graph above, yields have come down in the past year, making them less attractive to prospective investors than before.

Bonds from countries like South Africa and Brazil are a providing serious competition to Indonesia in this regard. But the country’s relative stability to these nations is keeping its bonds in play.

Apart from monetary policy, investors would want to keep an eye on the Indonesian rupiah for local currency-denominated bonds. A breakout from the narrow trading range that the rupiah maintained against the dollar could be a trigger point for Indonesian bonds.

After An ‘Easy’ YTD 2017, How Will Monetary Policy Impact Bonds Latin American Countries?


Inflation has been benign in Brazil. In its latest reading for September, it rose 2.5% from a year ago, which is below the central bank’s target of 4.5% plus or minus 1.5%. There are wide-ranging expectations regarding the Selic to be reduced to 7% by the end of this year.

In all likelihood, these expectations will materialize. However, the central bank has already expressed that future rate cuts could be gradual.

Given that the reduction of the Selic to 7% is largely expected, it is already priced into its bonds. At this juncture, aggressive rate cuts in 2018 are not expected and investors in the country’s bonds would need to focus on developments on the political front to drive bond yields once the rate cut cycle draws to a close.


Monetary policy easing in Peru this year has been aimed at spurring economic growth. The country’s economy had grown at a less-than-expected 2.4% pace in Q2 2017 after posting a 2.1% rate in the first quarter.

Inflation has stood at 3.04% in May, higher than the 1-3% range that the Banco Central de Reserve del Peru targets, but the reserve rate was still slashed for the first time this year. Though this seems counterintuitive, it was needed to support the economy and was made possible by views that the factors putting upward pressure on inflation were transitory.

Another indicator which helped the central bank reduce rates was the strength of the Peruvian sol against the US dollar. A stronger domestic currency increases the returns on local currency-denominated bonds when converted to dollars.

Similar to Brazil, the Peruvian central bank may be close to ending the rate reduction cycle. However, it can still consider cutting rates once either this year or the beginning of the next year depending on how inflation moves in response to the most recent rate cut. Inflation slowed to 2.94% in September, and if the impact of the intermittent rise in food prices is only transitory, one more rate cut may be in the offing.

Chile and Colombia

Unlike Brazil and Peru, monetary policy easing may have come to a close for now for both Chile and Colombia.

Chile’s Monetary Policy Rate was last slashed in May, and even though inflation remains benign at 1.5% in September, lower than its 3% target, moderation in the central bank’s stance indicates that until essential, further rate reductions may not be considered.

In its May policy statement, the Banco Central de Chile sounded neutral on further rate cuts by pledging to remain flexible about monetary policy. This was a major change from consideration of additional easing in the April statement, and easing being necessary given market conditions in the March statement.

However, the central bank has headroom to reduce rates further if conditions warrant in 2018.

As far as Colombia is concerned, the Banco Central de la Republica de Colombia may like to see the effect of the rate cut at the end of August on the economy. A bounce back in economic growth may reduce the necessity to ease policy rates further.

Monetary Policy May See Additional Rate Cuts In These 3 Emerging European Countries


The National Bank of Ukraine has slowed down the pace of rate cuts this year compared to 2016. The reason is visible from the graph below.

The central bank keeps a close eye on inflation as the key factor which determines whether further easing will take place or not. The upward trajectory of inflation in 2017 explains why rate cuts in the country have not been as aggressive this year as they were last year.

The central bank is targeting an inflation rate of 8% plus/minus 2% for this year and 6% plus/minus 2% for 2018. In its quarterly inflation report, last published in July, the National Bank of Ukraine had kept its inflation forecast unchanged at 9.1% for this year and 6% for the next.

Given the relatively high rate of inflation, aggressive rate hikes in the remainder of 2017 can be ruled out. However, if the indicator remains on the expected path in 2018, the central bank may resume slashing its discount rate next year.

Ukraine has been one of the most attractive places for fixed income investors in emerging Europe, along with Russia, this year. A further cut in interest rates would increase profits for investors already invested in the country’s bonds. Investors in local currency-denominated bonds would need to watch out for its movement vis-à-vis the US dollar, though.


Alike Ukraine, inflation has been the main driving factor behind the reduction in the refinancing rate by the National Bank of the Republic of Belarus.

However, unlike Ukraine, inflation in Belarus, which fell to 4.9% in September from 5.3% in August, is already below the central bank’s target of 9% for this year.

Given the fact the central bank aims to gradually reach the inflation rate of 5% by 2020 – a target which has already been met – it opens up the possibility of further rate cuts going into 2018.


Inflation in Russia stood at 3% in September, while core inflation was down to 2.8%. Both numbers were the slowest on record. This sets a stage for further rate reductions in the country. However, the path is not as straightforward as some of its peers.

This is because there is disagreement between the central bank and the government regarding the path of monetary policy traversed until now. While the government thinks that the central bank has been slow in responding to the decline in inflation, the central bank believes that there is a greater than anticipated risk of a rise in prices, thus justifying its cautious stance.

Though another rate cut before the end of the year is quite likely, market participants would need to read closely the stance of the central bank which sees risks to inflation and intends to remain measured in its moves – both in size and scope.

These 10 Emerging Market Central Banks Account For the Largest Interest Rates Cuts In 2017

Economic developments in emerging market countries throughout 2017 have led to many central banks reducing their key rates this year.

Some of the major emerging markets which have slashed interest rates are shown in the graph below with the levels of their key rates as on October 11.


Ukraine has cut its policy rate twice in YTD 2017 by a cumulative 150 basis points. The discount rate had begun the year at 14% and was last reduced in May by 50 basis points.

The country’s central bank – the National Bank of Ukraine – has been on a policy easing cycle since August 2015 and has cut the discount rate by a sizable 17.5% since then. Its speed of rate cuts has declined though; in 2016, the central bank reduced the discount rate by a total of 8 percentage points.


Belarus has seen quite a bit of monetary easing in the form of rate cuts this year. The National Bank of the Republic of Belarus has slashed its refinancing rate seven times so far and has already announced that it will introduce another cut in its meeting later in October.

The refinancing rate had begun the year at 18%, and with the announced reduction in October, it will decline to 11%. Of these eight cuts, six have been a full percentage point each.


In 2017 so far, the Central Bank of Russia has reduced its key interest rate by 150 basis points. The bank’s key rate began the year at 10%, and four reductions later, stands at 8.5%; the latest cut was effected on September 15. A dive in inflation in the country has been the primary driver of the aforementioned rate cuts.


The Banco Central do Brasil has been on an aggressive rate-cutting spree. In YTD 2017 alone, the central bank reduced its Selic rate six times and post the latest cut in September, it stands at a four year low of 8.25%.

South Africa

South Africa has seen only one rate cut this year. The South Africa Reserve Bank had surprised markets by reducing its average repo rate by 25 basis points to 6.75% in July but since then, has remained unmoved.

The rate cut in July was its first in five years and was aimed primarily at supporting the economy which had fallen into recession at the beginning of the year.


The Reserve Bank of India has been relatively cautious about easing monetary policy this year, slashing its key repo rate just once in August by 25 basis points to 6%.


Colombia has cut rates seven times this year. The Colombia minimum repo rate had begun the year at 7.5%, and with the latest reduction in August, the cumulative amount of cuts stands lower by 225 basis points.

Low inflation has allowed the Banco Central de la Republica de Colombia to slash rates and stimulate economic growth.


Bank Indonesia surprised markets when it cut its 7-day Reverse Repo Rate for the first time since October 2016 in August. It kept the surprise element going by catching market participants off-guard again in September. In total, the central bank has reduced its policy rate by 50 basis points in 2017 so far.


Similar to Belarus and neighboring Brazil and Colombia, Peru has witnessed several interest rate reductions in 2017. The Peru Central Bank Reference Rate has been slashed three times this year by a cumulative 75 basis points.

The first cut of the year was effected in May and it had marked the first decline in the reference rate in 14 months.


The Banco Central de Chile, similar to several of its Latin America peers, has cut its policy rates in 2017. Chile’s Monetary Policy Rate has been reduced four times this year by a cumulative one percentage point and stands at 2.5% at present.

How Do Market Capitalization-to-GDP Ratios in Emerging Markets Stack Up Against Developed Markets?

As emerging markets continue to attract renewed attention from investors across asset classes, these markets are expected to power global growth going forward.

Though the International Monetary Fund expects emerging market and developing economies to form a shade under 40% of the global economic output by the end of this year, these markets have not found a similar share in equity investors’ portfolio.

So how do their stock markets stack up against their developed market peers when comparing their respective gross domestic product (GDP)?

Highest ratios

According to Bloomberg data, in the past 14 years (from 2003 until 2016), the world stock market capitalization-to-GDP ratio had peaked at 104.2% in 2007 and then witnessed a nadir in the immediate next year at 50.6%. At the end of 2016, the ratio had stood at 89.6%.

Among developed markets, we have chosen the US, the United Kingdom, and Japan. In the period outlined above from 2003 until 2016, the ratio for the US peaked at 145.6% (2014), for the UK at 150.66% (2013) and for Japan at 116% (2016).

The graph above shows select emerging markets with the highest stock market capitalization to GDP ratios in the asset class.

South Africa, Malaysia, and Thailand are the only three countries whose stock market capitalizations exceed their economic outputs with only South Africa being comparable to the chosen developed market countries of US, UK, and Japan.

From 2003 until 2016, the country which has one of the largest stock markets in the emerging market universe had seen a peak in its market capitalization-to-GDP ratio at 152.2% in 2007. After a trough of 84.7% witnessed in 2008, its ratio has remained over the 100% mark for all succeeding years.

The ratio for Malaysia has had a similar trend to that for South Africa. In the aforementioned period, the highest it reached was 167.6% in 2007, followed by its lowest of 80.7% in 2008. On the other hand, the ratio for Thailand, which had seen a low of 36.3% in 2008, saw its peak at 107.37% in 2014.

The ratio for Qatar has seen a different trend. Though it remains among the highest in the emerging markets universe, it has nearly halved from its peak of 189% in 2005 mainly as its GDP swelled.

Lowest ratios

After taking a look at the emerging markets which have the highest stock market capitalization-to-GDP ratios, let’s take a look at the ones with the lowest ratios in the graph below. For reference, the ratios for world, US, UK and Japan have been reproduced from the previous graph.

Countries from Europe dominate this space.

For 2007, the stock market cap-to-GDP ratio for Turkey had stood at 43.6% according to Bloomberg data – its highest between 2003 and 2016. In the following year, it witnessed its lowest ratio in this period, which was 16%. After an increase in subsequent years, the ratio for 2016 was just below the 20% mark.

Hungary and Czech Republic have had undergone similar trends. The ratio for these countries peaked in 2006 and 2007 respectively at close to 40% each and then were at their lowest in 2014 and 2015 at 10.8% and 12.8% respectively. Hungary has seen a recovery in its ratio since its nadir but it still at half of its peak in the aforementioned period while that for the Czech Republic is presently at one-third of its level compared to its best in those years.

On the other hand, Greece and Egypt have had similar fortunes but for different reasons. While the minimum and maximum ratios for Greece were 11.6% (2011) and 82.5% (2007) respectively due to its economic issues, those for Egypt stood at 10.5% (2016) and 96.3% (2007) respectively due to political situations on the domestic front.

5 Under-The-Radar Emerging Market Tech Stocks Delivering Big Gains

Emerging market tech stocks are raging

Technology stocks have been driving emerging markets indices north. In 2017 to date, the MSCI Emerging Markets index is up 25% — the largest gains in the past six years. On average, tech sector stocks in the emerging markets index have surged 75% in the year so far, outperforming the index three-fold.

The biggest five emerging market companies in the index are tech firms Alibaba (BABA), Tencent (0700.HK), Samsung (005930.KS), Naspers (NPN.JO) and Taiwan Semiconductor (2330.TW). They comprise almost 19% of the MSCI Emerging Markets Index (EEM) in terms of market capitalization.

UBS Strategist Bhanu Baweja states that the IT sector contributed to 47% of the rise in the MSCI Index so far. Of the 830 stocks constituting the MSCI EM Index, 10 stocks have surged 41% year to date. “You don’t see that every year, I’m very certain we haven’t seen that ever,” he mentioned in a note to investors.

Gains in emerging markets have been primarily driven by large bellwether stocks like Samsung, Taiwan Semiconductor Manufacturing, Alibaba, Tencent Holdings and Naspers. In the year so far, shares of these companies have rallied 56%, 47%, 108%, 94% and 73%, and have outperformed the popular FAANG stocks.

Emerging market tech equities are expected to gain further as smartphone demand is rising in these countries.

The tech sector is gaining importance in equity indices as these companies dominate stock trading. In 1995, the tech sector constituted merely 2% of the MSCI Emerging Markets Index, but now have risen to 27%. In the United States, tech stocks make up 24% of the S&P 500 Index (SPY).

John Vail, chief global strategist at Nikko Asset Management Americas who is bullish on Asian tech stocks believes stellar earnings are driving gains in the stocks of these companies. Further, Internet penetration growth in emerging markets is higher than developed markets.

Michael Lippert, portfolio manager of Baron Opportunity Fund, also has big investments in tech stocks and believes “data is the new oil.”

Ben Laidler, a global equity strategist at HSBC , said investing in emerging markets hasn’t changed all that much, even if the type of companies is different.

Chinese tech stocks form the largest chunk of the pie when it comes to emerging markets tech stocks. HSBC estimates China contributes nearly 71% of tech sector revenues in emerging markets, and has been key to growth of the tech sector in these markets.

However, some experts believe the rally in the tech sector is overbought, and a correction is pending. Rob Young, manager of the $65 million ICON Emerging Markets Fund is currently offloading his investments in tech stocks like Alibaba and Tencent. “These stocks are highly sensitive to earnings growth, and if there is any slight deceleration, the stocks get hammered,” he said.


The MSCI Emerging Markets Tech index is currently trading at a PE of 21.2x while the MSCI US Tech stocks index trade at PEs of 25.2x. In comparison, the MSCI Emerging Markets Index trades at 15.8 times its past 12 months earnings.

Investors see valuations of tech stocks to be lucrative and see emerging markets stocks as a less expensive way to gain exposure to the high growth tech sector.

Stocks trading lower than their average price-to-earnings multiples or lower than the sector average price-to-earnings multiples attract investor attention because they’re considered cheap. The price-to-earnings multiple compares a stock’s price to its forward earnings per share. If a company trades at a high PE, it means investors are anticipating higher growth in the future.

Vipshop (VIPS), YY Inc (YY), Autohome (ATHM), Naver Corp and Baidu (BIDU) are currently trading at inexpensive valuations compared to their peers. They have one-year forward price-to-earnings multiples of 15.2x, 18x, 30x, 33x, and 34.4x respectively.

Meanwhile, (WUBA), Kakao Corp and Weibo are currently expensive. They have PE multiples of 388x, 102x and 97x respectively.

Analyst recommendations

Analysts are bullish on the technology sector in emerging markets based on favorable demographics and a growing Internet population. Kristina Hooper, the global market strategist at Invesco, believes emerging-market tech stocks are cheaper compared to their US counterparts and offer higher growth potential.

The table above shows the ratings of some large-cap tech stocks in emerging markets. Analysts are most bullish on big names like Alibaba (BABA), Tencent Holdings, NCSoft, Naver Corp and  Alibaba has received 47 buy ratings, and 3 hold ratings, while Tencent Holdings has received 44 buy ratings, and 2 hold ratings. Naver Corp has received 35 buy ratings, and 3 hold ratings. Comparatively, NCSoft and have received 35 and 33 buy ratings respectively. All these stocks have received no sell ratings.

The Next Ten: Emerging Market Tech Stocks That Could Soon Dominate the MSCI EM Index

Emerging market tech stocks now constitute 28% of the MSCI EM index, higher than the S&P 500 index

Innovation and technological advancement in emerging markets is steadily intriguing more investors. The US stock market benchmark index, the S&P 500 index (SPY) (IWM), has the largest share of its portfolio, with 23.2% (as of Sep 29) invested in information technology stocks (QQQ), followed by financials (XLF) which command 14.6% of the portfolio. The surge in the FANG stocks (FDN) over the past few years is one the primary reasons for the exceptional weighting. However, what usually remains unnoticed here is that the emerging market benchmark, the MSCI emerging markets index (VWO), has allocated an even higher weight to emerging market tech stocks than the S&P 500 index. Information technology stocks now command a 27.6% (as of September 29) of the MSCI emerging markets index portfolio. Furthermore, the iShares MSCI Emerging Markets ETF (EEM), which tracks the index, has 28% of its assets invested in technology stocks.

Will the tortoise win the race?

The behavior of global technology stocks over the past few years reminds us of the popular ‘hare and the tortoise’ fable by Aesop. While US-based tech stocks (XLK), much like the hare, were quick to pick up speed and race ahead, who is to say they may be approaching their resting point. Meanwhile, emerging market-based tech stocks (the tortoise in our analogy) have been slowly but steadily treading their path, unnoticed by many. Valuation data reveals that these emerging stocks are 35% cheaper than their developed market counterparts.

So, while it seems that emerging market tech stocks have established themselves as a point of interest for market participants, which ones merit our attention? The emerging markets index portfolio is currently invested in 844 securities, of which about 233 stocks (27.6%) belong to the information technology sector. So, here is a bird’s eye view of the top 23 (top 10% of the tech stocks) that are now commanding the highest allocation in the emerging market index. 

No. Ticker Top 23 tech stocks in the MSCI emerging markets portfolio Weight

(as of Sep 29)

1 TCEHY, 0700.HK Tencent Holdings Li (CN) 4.24%
2 SSNLF, 005930.KS Samsung Electronics Co 4.18%
3 TSM, 2330.TW Taiwan Semiconductor Mfg 3.63%
4 BABA Alibaba Group Holding ADR 3.01%
5 NPSNY Naspers N 1.95%
6 HNHPF, 2317.TW Hon Hai Precision Industry Co 1.16%
7 BIDU Baidu ADR 1.10%
8 000660.KS SK Hynix 0.63%
9 INFY Infosys 0.59%
10 JD JD.Com ADR 0.57%
11 NTES ADR 0.49%
12 035420.KS NAVER 0.45%
13 CTRP Ctrip Com International ADR 0.45%
14 TCS.NS Tata Consultancy 0.40%
15 3008.TW Largan Precision Co 0.34%
16 2454.TW MediaTek Inc 0.24%
17 AACAF, AACAY, 2018.HK AAC Technologies (CN) 0.17%
18 HCLTECH.NS HCL Technologies 0.16%
19 2474.TW Catcher Technology Co 0.15%
20 2357.TW ASUSTeK Computer 0.15%
21 LPL LG Display Co 0.14%
22 2382.TW Quanta Computer 0.13%
23 4938.TW Pegatron 0.13%


The surge amongst leading emerging market tech stocks over the past year is well documented. For example, the top five stocks in our list above had already delivered 68%, 72%, 40%, 77%, and 46% over the past 1 year in price return (as of October 30, 2017). Market participants have come to realize the potential of these companies and that seems to be priced into the blue-chips. Most of the top 10 stocks of those listed above have been surging and are trading at prices near about their 5-year highs.

However, for investors looking for cheaper bets, looking at the next 10 emerging market tech stocks may bring more value. Here are the key financial metrics {liquidity (current ratio), financial leverage (debt to equity ratio), profitability (gross profit margin)} and current (P/E) and expected (Fwd. P/E) valuation figures for the next 10 emerging markets information technology sector stocks (in accordance with the GICS classification) that could soon dominate the MSCI EM index.

The Next Ten

Company Price P/E Fwd. P/E Current Ratio Total Debt/Equity Margin% (NTES) $276.51 18.43 17.63 2.56 9.92 56.74
NAVER (035420.KS) $793.26 33.82 34.53 2.33 9.14 NA (CTRP) $47.01 157.76 56.02 1.52 55 75.40
Tata Consultancy (TCS.NS) $40.46 19.86 19.45 5.55 0.33 43.30
Largan Precision Co (3008.TW) $190.33 29.81 27.38 3.69 0.05 67.05
MediaTek Inc (2454.TW) $11.52 24.81 30.91 1.85 22.27 35.64
AAC Technologies (AACAF) (AACAY) (2018.HK) $17.75 NA 26.55 1.41 38.31 41.55
HCL Technologies (HCLTECH.NS) $13.12 14.09 13.61 2.33 1.34 34.21
Catcher Technology Co (2474.TW) $10.61 12.22 10.84 2.23 31.49 43.48
ASUSTeK Computer (2357.TW) $8.65 11.70 13.40 1.63 2.31 14.19


Price and return data as of October 30. Ratios as of FY 2016.

Exchange rates used for conversion (as of October 31): 1 US dollar = 1120.69 Korean won = 64.80 Indian rupees = 30.16 new Taiwan dollars = 6.63 Chinese yuan

  1. (NTES)

NetEase, Inc. is a Chinese Internet Technology Company providing online services centered on content, community, communications, and commerce. NetEase Games is a leading provider of self‐developed PC‐client and mobile games to worldwide users.

The company’s ADR is listed on the NASDAQ GS stock exchange under the symbol NTES. The stock commanded a market capitalization of $36.3 billion in the US stock market on October 30th. Year-end forward P/E for the depository receipt is estimated at 17.63. Estimated earnings-per-share stand at $15.68.

  1. NAVER (035420.KS)

Naver is a popular Web portal in South Korea. It was the first web portal to use its own proprietary search engine. Along with its search engine, the company provides other web portal services such as online games, and content development. The company also offers online marketing service through banner advertisement and e-commerce services.

The company’s stock is listed on the Korea stock exchange under the ticker 035420. The stock commanded a market capitalization of $26.24 billion in the Korean stock market on October 30th. Year-end forward P/E for the stock is estimated at 34.64. Estimated earnings-per-share stand at about $23.

  1. (CTRP) International, Ltd. is a leading provider of online travel agency services in China, including mobile applications, accommodation reservation, transportation ticketing, packaged tours and corporate travel management.

The company’s ADR is listed on the NASDAQ GS stock exchange under the symbol CTRP. The stock commanded a market capitalization of $24.1 billion in the US stock market on October 30th. Year-end Forward P/E for the depository receipt is estimated at 56.02. Estimated earnings-per-share stand at $5.56.

  1. Tata Consultancy Services (TCS.NS)

India-based Tata Consultancy Services Limited, a division of Tata Sons Limited, is a global IT services organization that provides a comprehensive range of IT services to its clients in diverse industries. The company caters to finance and banking, insurance, telecommunication, transportation, retail, manufacturing, pharmaceutical, and utility industries.

The company’s stock is listed on the National Stock Exchange of India under the symbol TCS. The stock commanded a market capitalization of about $80 billion in the Indian stock market on October 30th. Year-end Forward P/E for the stock is estimated at 19.45. Estimated earnings-per-share stand at $2.08.

  1. Largan Precision Co (3008.TW)

Taiwan-based Largan Precision Company Limited a major supplier of camera lens modules for smartphones, tablet computers, and digital cameras, among other devices.

The company’s stock is listed on the Taiwan stock exchange under the ticker 3008. The stock commanded a market capitalization of $25.6 billion in the Taiwanese stock market on October 30th. Year-end Forward P/E for the stock is estimated at 27.43. Estimated earnings-per-share stand at $6.95.

  1. MediaTek Inc (2454.TW)

MediaTek Inc. is a Taiwanese fabless semiconductor company that digital multimedia solutions.  for wireless communications, HDTV, DVD, and Blu-ray. The company is a market leader in developing tightly-integrated, power-efficient systems-on-chip (SoC) for mobile devices, home entertainment, network and connectivity, automated driving, and IoT.

The company’s stock is listed on the Taiwan stock exchange under the ticker 2454. The stock commanded a market capitalization of $18.22 billion in the Taiwanese stock market on October 30th. Year-end Forward P/E for the stock is estimated at 30.91. Estimated earnings-per-share stand at $0.37.

  1. AAC Technologies (AACAF) (AACAY) (2018.HK)

AAC Technologies Holdings Inc. designs, develops and manufactures a broad range of miniaturized components for mobile devices such as smartphones, tablets, wearables, ultrabooks, notebooks and electronic book-readers.

The company’s stock is listed on the US stock exchange under the symbol AACAF. The stock commanded a market capitalization of $21.7 billion in the US stock market on October 30th. Year-end Forward P/E for the stock is estimated at 26.55. Estimated earnings-per-share stand at $0.67.

  1. HCL Technologies (HCLTECH.NS)

HCL Technologies Limited is an Indian multinational IT services company. The company provides software development and related engineering services.  The Group’s technologies utilize a variety of technologies, including Internet and e-commerce, networking, internet telephony, and satellite and wireless communications, among others.

The company’s stock is listed on the National Stock Exchange of India under the symbol HCLT. The stock commanded a market capitalization of $18.71 billion in the Indian stock market on October 30th. Year-end Forward P/E for the stock is estimated at 13.60. Estimated earnings-per-share stand at $0.96.

  1. Catcher Technology Co (2474.TW)

Taiwan-based Catcher Technology Co., Ltd. is principally engaged in the manufacture, processing, and distribution of casings and components for computer and consumer electronic products.

The company’s stock is listed on the Taiwan stock exchange under the ticker 2474. The stock commanded a market capitalization of $8.17 billion in the Taiwanese stock market on October 30th. Year-end Forward P/E for the depository receipt is estimated at 10.84. Estimated earnings-per-share stand at $0.98.

  1. ASUSTeK Computer (2357.TW)

Asustek Computer Inc. is a Taiwanese multinational computer and phone hardware and electronics company. The company manufactures and markets computer motherboards, interface cards, notebook computers, and other related products.

The company’s stock is listed on the Taiwan stock exchange under the ticker 2357. The stock commanded a market capitalization of $6.43 billion in the Taiwanese stock market on October 30th. Year-end Forward P/E for the depository receipt is estimated at 13.40. Estimated earnings-per-share stand at $0.65.

3 Poland Stocks To Buy Before Its Upgrade From Emerging To Developed Next Year

Poland to be upgraded to developed market in 2018

FTSE Russell plans to upgrade Poland to Developed Market status by September 2018, making it the first Central and Eastern European country to be awarded Developed Market status. This will place Poland along with 24 developed nations ranked by FTSE, and stocks from the country would get included in the FTSE Developed All Cap Ex-US index. The largest investment banks and equity funds use FTSE Russell’s indices to mimic their portfolios.

Poland will constitute 0.38% of the FTSE Developed All Cap Ex-US, lower than its 1.6% composition of the FTSE Emerging All Cap index. As a consequence, JPMorgan expects outflows of $340 million from the country’s stock markets.

Marek Dietl, president of the Warsaw Stock Exchange (WSE) believes this development is a big step and will encourage economic development and capital flows in the country.

“The FTSE Russell upgrade of Poland to Developed Market status represents an acknowledgment of the progress of the Polish economy and capital markets and is a major step in their development”, he mentioned. “Poland has all the features of a developed market, including secure trading and post-trade services, as well as advanced infrastructure,” Mr Dietl continued. “The WSE uses a state-of-the-art trading system and its listed companies meet the highest standards of corporate governance and disclosure requirements. Furthermore, the dynamic development of the Polish economy represents an opportunity for international investors. Poland’s upgrade to Developed Market status is a challenge which we are ready to face.”

Why it matters

Countries that get included in MSCI indices usually attract fund flows. There are passive funds that track these inclusions to keep tabs on overall market sentiment. Index weighting and composition is an important metric for investors as fund managers and foreign investors try to mimic the index when allocating their funds and building their portfolios.  Countries that are included in the MSCI Index generally see higher allocation from foreign investors. The addition of stocks to major indices also increase their overall trading volumes and thereby their returns. Conversely, removal can lead to outflows from the country’s stock’s markets. In Poland’s case, experts currently expect outflows in the near-term as global portfolio managers will realign their portfolios after the upgrade.

ETFs offering exposure to Poland

Foreign investors seeking exposure in Poland could invest in country-focused ETFs that offer diversification through investment in a single US security. Alternatively, investors wanting direct exposure could consider ADRs of Polish companies.

The most popular ETFs for U.S. investors are the iShares MSCI Poland Capped ETF (EPOL) and the VanEck Vectors Poland ETF (PLND). The VanEck Vectors Poland ETF (PLND) invests 91% of its portfolio in Polish Equity while the iShares MSCI Poland Capped ETF provides 100% exposure to Poland.

With assets under management of $356 million, the EPOL ETF offers concentrated exposure to polish companies. Financials are the top sector with 43% of assets, followed by energy, consumer cyclicals, and utilities. The funds top ten holdings constitute ~60% of its assets. The fund is up 49% over the last one-year period, and year-to-date in 2017 it has gained 47%.

The PLND ETF invests in a portfolio of companies that generate at least 50% of revenues from Poland. Financials are the top sector with 39% of assets, followed by energy, consumer cyclicals, and utilities. With assets under management of only $21 million, this fund has been unable to garner significant interest from the investor community. However, the fund is up 53% over the last one-year period, and year to date in 2017 it has gained 50%.

Stocks to buy

Year-to-date, the MSCI Poland Index has surged 15.83% while the Polish benchmark WIG20 index has gained 29%.

The largest Polish stocks by market capitalisation are Polski Koncern Naftowy Orlen, Pko Bank Polski Sa, Powszechny Zaklad Ubezpiecze, Polskie Gornictwo Naftowe I, Bank Zachodni Wbk.

Currently, these stocks have market caps of $14.9 billion, $12.4 billion and $10.5 billion, $10.5 billion, and $9.7 billion respectively.

Year to date, shares of these companies have returned 20.5%, 7.7% and -12.8% respectively.

Polski Koncern Naftowy Orlen

PKN Orlen is a Poland based oil refiner and petrol retailer with largest operations across Poland, Czech Republic, Germany, and the Baltic States. Orlen is the largest fuel retailer in Poland with 2,000 outlets and has made significant investment abroad. The company has a majority stake in Czech based refiner Unipetrol. Orlen also owns ~85% of the only oil refinery in the Baltic States – ORLEN Lietuva – that it took over in 2006 from Yukos.

PKN Orlen, under a joint venture with the Netherlands firm Basell, also owns Poland’s largest plastics company. In 2005, PKN Orlen was involved in a proposed merger with Hungarian oil major MOL Group that would have resulted in the combined companies becoming the largest in Central Europe. However, the planned merger failed.

PKN Orlen is the largest Polish company by revenues with annual sales of $20.2 billion in 2016.

The company trades on the Polish, Berlin and Frankfurt stock exchanges with tickers PKN.WSE, PKY1.BE and PKY1.F. With a market value of over $14.9 billion the company is currently the most valuable company in Poland.

PKO Bank Polski SA

PKO Bank is Poland’s largest bank with assets of nearly $78 billion in 2016. PKO Bank is one of the best-recognised and most valuable brands in Poland. The bank’s primary area of expertise is retail banking. It services both retail and corporate clients. The bank also has a presence in Ukraine through its stake in Kredobank.

The Polish state government still holds a 51.2% stake in the bank through various state-owned companies, despite the bank going public on the Warsaw Stock Exchange in May 2011.In 2016, PKO Bank reported net interest income of nearly $2.1 billion and ranked 900 on the Forbes Global 2000 companies.

The company trades on the Polish, Berlin and Frankfurt stock exchanges with tickers PKO.WSE, P9O.BE and P9O.F.

Powszechny Zakład Ubezpieczeń

Powszechny Zakład Ubezpieczeń, or PZU Group is one of the largest financial institutions in Poland and is one of the biggest insurance providers and Eastern and Central Europe.

PZU Group offers the largest selection of insurance products in Poland in the areas of non-life insurance, personal and life insurance, investments funds and open pension fund. PZU provides comprehensive insurance coverage in all key sectors of private, public and economic activity. The PZU Group also manages an open pension fund, investment funds and savings programmes.

In 2016, the company generated revenues of $6.2 billion, gross written premiums of $2.9 billion and net profits of $436 million.

The company trades on the Polish, Berlin and Frankfurt stock exchanges with tickers PZU.WSE, 7PZ.BE and 7PZ.F.

Argentina Had Only Three IPOs Since Macri Took Office, But The Boom is Coming

IPO markets surged

The equity offerings market in Argentina touched a 3-year high in 2017 with 17 new deals (IPOs, FPOs and private placements) announced.

New share offerings had been slow to take off since President Mauricio Macri took office in 2015 with just 9 offerings in 2015 and 2016. This includes 2 international IPOs in the United States and one locally listed IPO. The rest in this period were all follow-on offerings.

Even though the Argentinean benchmark Merval Index nearly doubled since Macri took over, Argentina’s stock market has failed to attract IPOs, as valuations have remained low compared to other emerging markets. MSCI’s decision to decline emerging market status to the country also acted as a deterrent to investments in local stock markets.

Since 2015, the Global X Argentina ETF (ARGT) is up 71% while the MSCI Argentina Index has gained 81%. In comparison, the Merval Index has surged 223% during the same period.   

President Macri’s reformist policies aimed to open up the economy have gained much appreciation from the international investor community. The country’s inflation target of 12-15% by end of 2017 seems achievable and GDP has grown by 0.7% in Q217. Consumer confidence has also rebounded, driving equity markets to fresh highs.

Daniel Patron Costas, head of investment banking at Banco Santander Rio SA, expects Argentina’s IPO markets to pick up in 2018 as valuations begin to rise. “Issuers are looking to see if their valuations are the highest they can be,” he said in an interview to Bloomberg. “The IPO boom might not be in 2017, but 2018 should be the key year,” said Costas.

According to Bloomberg, nearly 17 offerings (including primary and second issues) have been announced in 2017 so far, with an aggregate deal value of $7.1 billion. Of these, nearly 59% of IPOs were from the financial sector, while telecommunication and industrial companies made up 23% and 12% of IPOs.

Is the tide turning for Argentina’s IPOs?

Over the next 18 months, Santander expects nearly 6 international IPOs, primarily in the energy, infrastructure and agribusiness sectors.

There are several large IPOs already in the pipeline to be listed in 2017. These include Loma Negra, Genneia, Cañuelas Mill, Central Puerto, Corporacion America and TGLT. Technology companies dominate the list of IPOs after the successful listings by Despegar, Globant and MercadoLibre earlier this year.

Upcoming IPOs To Look Out For

Argentina’s equity markets have picked up in 2017 with 17 offerings (including IPOs, private placements and FPOs) in 2017 so far, and around 6 companies slated to list abroad over the next six months. As per Bloomberg, five companies alone may raise up to $2.8 billion. This is the highest number of IPOs since 2007 when four Argentinean stocks raised $1.6 billion. Large companies like Loma Negra, Molino Canuelas Sacifia, and TGLT are seeking listings in the United States.

  • Loma Negra Cia Industrial Argentina – Cement maker Loma Negta plans to raise $800 million in a dual listing in New York and Argentina. The company will offer $50 million ADRs with each ADRs representing five common equity shares of the company. The shares will be priced at a range of $15-$19. The IPO was filed in September 2017, and will get priced on October 31. Proceeds from the IPO will be used to fund the expansion of Loma’s L’Amali plant in the Buenos Aires region.
  • Molino Canuelas SACIFIA – Leading flour and oil producer Molino Canuelas aims to raise $100 million in a public listing on the New York Stock Exchange. The company filed for an IPO in September 2017 and has selected Itau BBA, JPMorgan, and UBS as book runners for the offer. Molino Canuelas seeks a dual listing in New York as well as Argentina. Details of the IPO are yet to be announced.
  • TGLT – TGLT aims to raise $50 million in a public issue on the New York Stock Exchange. The company filed its IPO in in June 2016 with the SEC. Leading investment banks JP Morgan, Morgan Stanley, Santander and UBS are underwriters to the IPO. Pricing details are still to be announced. The company’s shares have been trading on the Argentinean stock exchange since November 2010 and are up 84% since debut.

Historical performance of Argentina IPOs under Macri

Since 2015, Argentina’s companies announced merely 13 IPOs (primary offerings), of which 6 were announced in 2017.

  •, (DESP)(D3G.F) Latin America’s leading online travel agency raised $381 million in a public listing on the New York Stock Exchange in September 2017, making it the largest IPO under Macri’s Presidency. offered 12.8 million shares priced at $26, the high-end of the offering range of $23-$26., which sells airline tickets, travel packages and hotels in 20 countries around the region, was valued at almost $2 billion after its successful IPO. The IPO was 13.4x oversubscribed and the stock hit a high of $31.50 on its first day of trade. Prior to the IPO, leading travel portal Expedia owned 16.4% of Despegar that it bought in 2015, while US Hedge fund Tiger Global Management owned 57.3% stake. Offer to date, shares of the company have appreciated 15.4%.

  • Grupo Supervielle’s (SUPV.BA)(SUPV) raised $301 million IPO in June 2016 in a dual Listing in New York and Argentina. The company’s ADRs have returned 132% to date since then, while its Argentina listed shares have returned 135%. Grupo Superveille was the first Argentinean company to get listed abroad since 2010, signaling a turn in investor sentiment. The company’s ADRs were offered at $11-$13 while its common shares were available in Argentina for $2.20-$2.60.

  • Havanna Holding (HAVA.BA), an Argentina based confectioner raised $11.5 million in a public listing in June 2016. The company issued 4.27 million shares, equating to 10 percent of the company at 37 pesos per share, valuing the company at around $114.7 million. The IPO was 2x oversubscribed, with 17% of applications coming from foreign investors. Havanna’s offering was the first solely local equity offering since the Petrolera Pampa’s IPO in 2013. Since the offer, shares of the company have declined 4%.

Electric Vehicle Battery Makers Are Disrupting Global Mining of These 3 Metals

World’s top battery makers have a plan…

With cobalt prices soaring, the world’s top battery makers, a majority of which are based in emerging Asia (AAXJ) (VPL), are looking to tweak the ratios of raw materials used in the manufacture of lithium-ion batteries. More specifically, they’re attempting to reduce the amount of one of the more expensive components, cobalt, being used in the production process. The rare metal has more than doubled in price over the past year on strong demand accompanied by a supply shortage. We’re now seeing car giants rushing to lock in supply deals with cobalt miners. The Volkswagen (VLKAF) (VLKAY)-CATL-Glencore (GLNCY) (GLCNF) deal in just one example.

…with the demand for EVs to jump 20x by 2025

With the demand for electric vehicle batteries predicted to jump 20-fold from 2015 to 2025, emerging market  (EEM) (VWO) battery makers are currently testing a new recipe.

Panasonic (PCRFF) (PCRFY), the world’s leader in battery production, is working on reducing cobalt consumption in its battery production process. With customers including Tesla (TSLA), Panasonic currently employs NCA (nickel-cobalt-aluminum) technology in battery production. The two companies are now together working to develop a battery with 85% nickel composition.

South Korea (EWY) based Samsung SDI (SSDIF) and LG Chem (LGCLF) are developing new power packs that use more nickel and less cobalt. Samsung SDI expects the industry-wide amount of cobalt per battery unit to decrease to about half of current levels over the long term.

Change is good

Currently, the more popular NMC (nickel-manganese-cobalt) formula employs a 6:2:2 ratio; that is, a ratio of 60% nickel to 20% cobalt and 20% manganese. SK Innovation, another of South Korea’s top battery makers, is working to change the composition of these cathode materials to 80% nickel, 10% cobalt and 10% manganese; so an 8:1:1 ratio.

Consequently, depending on the success of efforts to change the ratio of lithium-ion batteries inputs from the current 6:2:2 to 8:1:1, the demand for nickel may grow by 10-40% from its current level by 2025 (according to a UBS report).

Meanwhile, China’s (FXI) (YINN) EV battery producers such as BYD (BYDDF) (BYDDY) are focused on cheaper lithium-iron-phosphate (LFP) batteries that don’t use either nickel or cobalt.

Petropolis To Ecopolis: Can Emerging Market Cities Become Sustainable?

Cities in emerging economies face massive huge hurdles in the struggle to reach their full potential.  Perhaps the central problem many face is successfully absorbing a rapidly expanding population as people continue to migrate from the countryside, but without becoming overcrowded dystopias.

Urban areas in emerging and developed economies also face extremes of poverty, pollution, waste and increasingly the malign effects of global warming such as flooding, at times it must seem that these are insurmountable challenges, but around the world cities and towns have been successful at finding at least part solutions to these problems.

As someone who has spent a lot of time in emerging economies I realise that getting cities “right” is key to our future, the best cities are intense concentrations of humanity which produce the world’s leading businesses, art and ideas and to live in them gives you a constant sense of excitement and wonder. Who cannot fail to feel that tingle of excitement as they enter one of the globe’s major cities for the first time? Just as I have when first experiencing cities like Shanghai, Delhi or Saigon.

However while even the most unpleasant cities on earth can provide that buzz, they can also make life extremely uncomfortable for its inhabitants. Adapting the world’s most unhabitable and unpleasant cities to make them more liveable is clearly one of this century’s key  challenges.


Curitiba is proof that you don’t need huge budgets to change a city. Curitiba’s mayor Jaime Lerner started his tenure in the 1970’s and quickly decided that the city shouldn’t fall into the trap that other Brazilian cities had becoming increasingly dominated by cars with shanty towns around the edges along with soaring crime rates and widespread corruption.

Instead the mayor resisted developers and insisted on green spaces, so now there are 50 sq metres of parkland per inhabitant, making it Brazil’s greenest city. The innovative mayor pedestrianised major streets practically overnight to avoid objections by shopkeepers but in doing so revived the city centre. Again swimming against current trends he avoided building a costly underground system and instead invested in an innovative bus network.

Other schemes also developed, city dwellers can trade rubbish for tokens and cash in a scheme designed to help alleviate poverty and litter. While the city is far from perfect it does provide a superior environment to many other Brazilian cities which are beset by pollution, poverty and overcrowding.

Tianjin New City

Chinese urban dwellers have increasingly suffered from unchecked air and water pollution as well as chronic traffic problems and so it is no surprise that China took the lead in promoting the concept of a sustainable city, the result is the Sino-Singapore Tianjin Eco-city, as the name suggests it is joint venture between Singapore and China whose vision is to be “A thriving city which is socially harmonious, environmentally-friendly and resource-efficient – a model for sustainable development”.

This city was newly constructed close to Tianjin and was built with public transport, cycling and walking in mind. The city also has extensive vegetation and water to enhance the environment of the city. The success of the project is measured by 26 key performance indicators such as air quality, carbon emissions per unit of GDP, recycling rate, proportion of green trips and proportion of affordable public housing.

Compared to the majority of Chinese cities, Tianjin New City is in a different league in terms of liveability, the question is how can China emulate its approach in other new developments which will continue to grow as the mass migration from rural to urban areas continues.

The InterAmerican Development Bank

Another approach to sustainable cities has been taken by the Inter-American Development Bank – which works with established cities in Latin America and Caribbean on comprehensive action plans in an effort to make them more sustainable.

Cities like Nassau, Montego Bay and San Jose undergo a program which firstly involves a diagnostic that identifies the problems faced by the city, these are then prioritised and a plan is formulated to tackle them, studies are made and a monitoring system is designed, then finally the action plan is implemented which attempts to tackle the city’s economic, social and environmental problems head on in a co-ordinated manner. Like Tianjin key performance indicators are monitored such as:

  • Percentage of the population with access to wastewater collection.
  • Time required to obtain an initial business license.
  • Number of homicides for every 100,000 residents.

These are published and so the success (or not) of the program is transparent to everyone. These cities are all living examples of how the developing world has improved life for at least some of its inhabitants. In the next article I go into more depth on the future of sustainable cities and how they can adapt to existing and future challenges.


Merlin Linehan has worked in development finance within Eastern Europe and Asia, and spends much of his time investigating the risks and opportunities that are created from the ongoing expansion of Chinese businesses that invest overseas in emerging markets.

This column does not necessarily reflect the opinion of the editorial board or Frontera and its owners.