This week, we speak with Ruchir Sharma, Chief Global Strategist and head of the Emerging Markets at Morgan Stanley. He has been with the firm since 1996, and manages a team of 25 people who help him run more than $20 billion in assets.
Raised in Delhi, the son of a military officer, Sharma had been writing a newspaper column for India’s largest financial daily, the Economic Times, since age 17 when he was recruited to finance. He is a frequent contributor to the Foreign Affairs, Financial Times, and the New York Times, and is the author of the highly regarded book Breakout Nations: In Pursuit of the Next Economic Miracles; this month, he published a new book titled The Rise and Fall of Nations: Forces of Change in the Post-Crisis World.
Sharma describes the four “Ds” of the modern world today: Depopulation, Deglobalization, Deleveraging, and De-democratization. These are the key geopolitical factors driving huge changes across economies. This is marked change from the post war era of 1950 to 2008 marked by an era of rising population growth, increasing productivity, greater wealth for the middle class, and increasing trade.
Sharma’s 10 point plan for evaluating emerging markets includes:
-Demographics, people matter
-Local Politics are important
-States need to be efficient an right sized
-Income inequality is an issue; look at billionaires – those coming from innovation (good) or corrupt industries (bad) are telling
-Geography sweet spot
-Factories and investment first (vs curse of commodities)
-Currency and exchange rates matter
-Inflation and Financial stability
-Debt is powerful drag
-Hype Watch (curse of the cover story)
He enjoys foreign films and regularly attends film festivals, noting that film are a great way to get a better feel for the local culture of a country. When asked for advices, he tells people to “Live life in parallel, not in series.”
All of Sharma’s book recommendations are found here.
You can hear the full interview, including our podcast extras at iTunes, Soundcloud, and Bloomberg. All of our earlier podcasts can be found iTunes, Soundcloud, and Bloomberg.
Next week, we speak with Louise Yamada, the grande dame of technical analysis.
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