Joseph Mariathasan: The case for active in emerging markets

first_imgThis acknowledges that most dispersion between emerging market stock returns is due to country factors. It has certainly been true in the past that one characteristic of emerging market stocks was the generalisation that they were more highly correlated to their local stock market than their global sector allocation.While this tendency has grown more muted over the last couple of decades, the dispersion across emerging markets in the immediate aftermath of the US election was quite striking. Russian stocks climbed 20% between 8 November and mid-February, while Polish and Egyptian equities were up about 12% over the same period. Mexican stocks fell 12%.Are emerging markets riskier than developed? Economist and entrepreneur Jerome Booth always likes to proclaim that the difference between the two is that, in emerging markets, risk is acknowledged and discounted, while developed markets suffer from a misperception of risk.From a developed market investor point of view however, as Subramaniam points out, single-country emerging market portfolios can remain riskier than their developed market counterparts by one important measure: currency risk. MSCI finds that in many countries, over 40% of market volatility arises solely from currency effects.Yet what Subramaniam does not point out in his article is that developed markets also see tremendous volatility from similar sources. The Brexit vote caused sterling to fall almost 20% against the dollar and has every chance of falling much further. The long-term survival of the euro is also at risk with political uncertainties sweeping across Europe.While currency risk is inherent in any emerging market transaction, it is also present in a developed market transaction outside the home market. The management of this risk is primarily through diversification across the universe of emerging markets. But as the divergence between developed and emerging markets grows stronger, the rationale for having separate passive global emerging market mandates may become weaker.Subramaniam argues that the divergence in results across emerging markets suggests that, as emerging markets mature and both country and currency effects widen, institutional investors can implement more active mandates to take advantage of the differences. Provided, that is, they are willing to accept the risks.Perhaps the greater problem investors have faced in emerging markets, however, has been the volatility associated with large scale flows into and out of global emerging market exchange-traded funds, which have pushed markets both up and down. For long-term institutional investors, perhaps such volatility should be discounted – and investment decisions made on assessments of fundamental valuations rather than fund flows. That would suggest treating major emerging markets such as China and India as separate investment destinations in their own right, much as Japan has been considered for the past three or four decades.What is clearer is that passive global emerging market allocations based on a market cap weightings give institutional investors excess volatility associated with fund flows rather than fundamentals. Perhaps it is time for a more intelligent approach. MSCI in a recent note raised the issue as to whether it is time investors re-examined their approaches to investing in emerging markets.Raman Aylur Subramanian of MSCI’s equity applied research team makes the point that institutional investors face at least three choices in their allocations to emerging markets. They can allocate to an integrated, global equity approach (active or passive). They can adopt a dedicated emerging markets allocation. Or they can make active allocations to particular countries within emerging markets.There is a long-term structural change in the world which can be seen as the narrowing of the arbitrage between emerging markets and developed. There are many different manifestations of this, including the rise of the domestic consumer within emerging markets, and the increasing role of trade flows within emerging markets, compared with trade flows between emerging markets and developed.Then there is what MSCI themselves raise in Subramaniam’s article, namely the convergence of return and risk profiles between developed and emerging markets. Combined with the dispersion between countries within emerging economies, this means that some institutional investors are reconfiguring mandates to take more active views on individual countries.last_img read more

GECOM cannot remove names from National Register of Registrants – CJ orders

first_imgH2H legal challenge…”other options” can update voters’ listChief Justice Roxane George has ruled that the ongoing House-to-House Registration is not unconstitutional, but noted that it is unconstitutional for qualified persons to be removed from the list.Former Attorney GeneralAnil NandlallChief Justice Roxane GeorgeAt the High Court on Wednesday, the Chief Justice did not grant any of the orders sought by Christopher Ram, who had challenged the constitutionality of the House-to-House Registration and wanted the court to compel the holding General and Regional Elections by September 18.In her ruling, Justice George concluded that the House-to-House exercise being conducted is not unlawfully or unconstitutional. However, the Court did note that it is unconstitutional for qualified persons to be removed from the list if they are not in the jurisdiction or not at their residence during the registration exercise. She further stated that only deceased persons and those otherwise disqualified under Article 159 (2), (3), or (4) are to be removed.Pointing out that the “right to vote and the right to be registered to vote are sacrosanct”, the High Court Judge said “residence requirements from citizens is no longer a qualification for registration”.Ram’s lawyers, who included former Attorney General Anil Nandlall and Senior Counsel Ralph Ramkarran, had argued in the application that the current registration exercise will disenfranchise many Guyanese who are already on the list.Furthermore, the Chief Justice had noted that while it is not up to the Court to determine whether House-to-House should be held, it is not the only option available to the Guyana Elections Commission (GECOM) to update the list. To this end, the Court further noted that it is up to the Elections Commission to determine a way forward within the confines of the constitutional provisions.“The Court did not agree with submissions from the CEO (Chief Elections Officer Keith Lowenfield) that House-to-House is necessary… GECOM may have to consider other options… GECOM cannot operate as in a normal elections cycle,” she said, adding that it has to take into consideration the December passage of the No-Confidence Motion (NCM) which has been validated by the Caribbean Court of Justice (CCJ).In fact, both Nandlall and SC Ramkarran told reporters after the decision that this aspect of the judgement is significant, since it meant that House-to-House is not mandatory, and more importantly, not the only option for GECOM to revise the voters’ list.“The Court pointed out very emphatically and very clearly that GECOM must now determine which one of the two courses of action it will chose, having regards to the timeframe that are available and that have become exigent upon the passage of a No-Confidence Motion. The Court endorsed our argument that the list can be refreshed with a suitable Claims and Objections period; so the ball is now in GECOM’s court to determine which one of the two courses it will choose, and one will obviously lead to unconstitutionality as the CJ pointed out,” Nandlall contended.But Lowenfield’s lawyer, Roysdale Forde, told reporters that aspect of the decision dealing with the removal of persons from the voters list is flawed.“I believe that it is a serious ground, a serious flaw in the decision and I would advise my client to appeal. The issue was never raised as part of the pleadings in the documents,” Forde contended.Similar sentiments were raised by Attorney General Basil Williams, who said that this is something GECOM will have to look at. In fact, GECOM’s attorney, Senior Counsel Stanley Marcus, told reporters that he will be advising the Elections body today on the way forward.The Claudette Singh-headed Commission will be holding its first statutory meeting today since the appointment of the new Chair. This meeting is expected to yield the Commission’s position on the way forward.Nevertheless, another significant decision handed down by the Chief Justice on Wednesday had to do with the holding of General and Regional Elections.Ram had sought a conservatory order compel the CEO and others to host early elections on or before September 18, 2019 in compliance with the constitutional provisions in Article 106 (6) and (7) and the rulings of the CCJ.However, Justice George, in her ruling, posited that the High Court cannot name a date for when elections ought to be held, especially since this was not done by the country’s highest court – the CCJ.“It is not the role of the [High] Court to establish when elections are to be held… The CCJ did not and could not name a date for when elections are to be held… therefore, this court cannot decisive a date when elections ought to be held,” the Chief Justice ruled.But that aspect of the decision did not sit well with the lawyers representing Ram. In fact, Nandlall told reporters that they will appeal this, since there just cannot be no date for when early elections are to be held, especially since the passage of the NCM was validated, thus, triggering constitutional provisions that caters for early polls.“It cannot be open-ended. The CCJ judgement could not have meant elections will never be held unless Parliament agrees [to an extension of the elections date by two-thirds of all sitting Member of the National Assembly]. Suppose Parliament does not agree? There is always a timeframe implied; the Constitution must be obeyed at its earliest convenience. And so in relation to that, respectfully, I am not impressed with that aspect of the ruling and that certainly will excite the review of an appellate tribunal. We must have a second opinion…,” Nandlall declared.Furthermore, during Wednesday’s ruling, Justice George also dismissed the applications filed by AG Williams for the Court to dismiss Ram’s challenge, and one filed on behalf of the Chief Elections Officer for the Chief Justice to recuse herself from hearing the case.The Court awarded costs in the sum of $500,000 to Lowenfield and other parties against whom Ram’s case was filed. However, both GECOM and the AG will have to pay 75% and 80% of that sum for the cases of the applications they filed that were dismissed.last_img read more

Andy Murray Loses to World No.240 in Round of 16 at Mallorca Challenger

first_img Get the best of News18 delivered to your inbox – subscribe to News18 Daybreak. Follow on Twitter, Instagram, Facebook, Telegram, TikTok and on YouTube, and stay in the know with what’s happening in the world around you – in real time. andy murrayMallorcan Challengertennis First Published: August 30, 2019, 11:21 AM IST Mallorca: Andy Murray suffered a setback in his return from injury as he slipped to a surprise last-16 loss to world number 240 Matteo Viola at the second-tier Challenger event in Mallorca on Thursday.The three-time Grand Slam champion, returning after hip surgery, was beaten 3-6, 6-4, 7-6 (7/3) by his Italian opponent. Murray was competing in a Challenger tournament for the first time since 2005 and had cruised through his opening two matches at the Rafa Nadal Open in straight sets.A third consecutive such victory looked on the cards when he took the opening set with two breaks of the Viola serve, but he dropped the second despite twice fighting back from a break down.The former world number one again recovered an early break in the decider, but lost a tie-break on Viola’s second match point.🗯 @andy_murray se despide del @ATPChallenger #RafaNadalOpen by @sothebysrealtyIt was great to have you at the #rafanadalacademy, we hope to see you soon 😍— Rafa Nadal Academy by Movistar (@rnadalacademy) August 29, 2019The 32-year-old, currently ranked 328th in the world, had a metal hip implanted in January and pulled out of the doubles at the ongoing US Open in order to concentrate on his singles comeback.Murray had suffered back-to-back first-round losses on the ATP Tour earlier this month — against Richard Gasquet in Cincinnati and Tennys Sandgren in Winston-Salem. last_img read more