Excel Funds Management Inc.

Emerging Markets


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Emerging Markets drive Coca-Cola Profits

The Coca-Cola Co. says its net income rose 3 per cent in the third quarter, as the world’s biggest beverage maker expanded in in emerging markets and sold more of its sports drinks and teas at home.

The Atlanta-based company, which makes Sprite, Fanta, Minute Maid and Dasani water, says global sales volume rose 4 per cent during the period. But the growth was more pronounced in emerging markets, where Coca-Cola has been looking to capitalize on the growing ranks of middle-class consumers.

In its flagship North American market, the company said sales volume rose by 2 per cent. The increase was driven by what Coke refers to as “still beverages,” such as Powerade, Gold Peak and Fuze teas. Its sparkling beverage unit, which includes its namesake soft drink, was flat from a year ago.

In India, by contrast, the company saw a 34 per cent increase for its Coca-Cola brand and a 15 per cent increase for Sprite. Overall sales volume in India was up 15 per cent during the period.

This is a message that we must communicate to our clients, this just goes to prove on how large multinationals continue to seek growth outside of the traditional markets. This growth that we continue to see and growing middle class goes to show the importance of having exposure to these markets are so important. The Excel Blue Chip Fund is great for investors seeking exposure to these markets, but having the comfort of staying at home with their investments.

Written by Sam A.

Source: Emerging markets drive Coca-Cola profits


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Many of the BRIC countries are rich in resources, have an abundance of young and very educated work force that will continue to accumulate wealth and therefore demand and consume more.

There are numerous reasons to invest in BRIC countries over the next decade.  First and foremost, the BRIC and emerging markets nations are not riddled with debt and are building up their foreign currency reserves which has helped them enjoy credit upgrades rather than downgrades by S&P and Fitch which we have noticed with a number of developed nations over the past year.  Many of the BRIC countries are rich in resources, have an abundance of young and very educated work force that will continue to accumulate wealth and therefore demand and consume more.  Nigel Green who is the boss of the world’s leading independent financial advisory group says that “Aggregate consumption between the four countries is currently estimated to be around 4 trillion dollars and this is expected to grow by around 15% to 20%. Therefore, by the middle of the decade, the BRIC nations will see their combined consumption increase by more than a trillion dollars – and this is a conservative estimate.”  Starbucks is quick to recognize this domestic consumption story and will be trying to capture part of the growth by opening its first establishment next month as part of an overall investment of approximately $78M in the subcontinent.  Green believes it would be wise given the current market conditions to have a very diversified portfolio and to follow in Starbucks strategy and incorporating BRIC nations in your balanced portfolio.

 

Goldman Sachs Jim O’Neill also believes that the Next Eleven (N-11) namely Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam, alongside the BRIC nations are also very noteworthy countries to be investing in over the next decade.  Mr Green notes that “It is estimated that within the next decade the combined GDP of the BRIC and N-11 countries will be double that of Europe and the US together.”

 

With this in mind, our BRIC Fund not only invests in BRIC countries but also other emerging markets nations, is coming up to a 3 year track record come November 2nd, 2012.  It is not only the best performing BRIC mutual fund in Canada but it has also done well this year with a gain of 5.89% YTD (Source: Globefund as at October 5, 2012).

 

Written by Devin L.

 

Please see the following article for more information:

http://investmentinternational.com/news/alternative-investments/follow-starbucks-example-5155.html


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India, China consumer spending to triple by 2020: study

Boosting the economic growth and corporate profits in the developed world is what’s expected to happen by 2020 in China and India. How you ask? Well, the consumer spending in those two countries are expected to triple to $10 trillion a year combined. The prediction is that China and India will spend a total of $64 trillion on goods and services in the decade leading up to 2020. Investors have been wary about China and India in the past few quarters due to slow economic growth and political risks, but the middle class in the two countries is expected to reach 1 billion by 2020 and the size of middle class population is to raise an additional 17% since 2010. As per these predictions, the future spending habits of the middle class will help the economy, proving that India and China won’t let their investors down. Accelerating middle class growth is fueling consumer spending and economic development.

Written by Melissa W.

http://ibnlive.in.com/news/india-china-consumer-spending-to-triple-by-2020-study/297279-3.html


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TURN TO EMERGING MARKETS

It looks as though since the rally in domestic securities portfolio managers across the board are less bullish on domestic securities.

The fact of the matter is that Domestic evaluations are within line of expectations and emerging markets represent attractive evaluations on a forward

Basis. I have looked at the Hang Seng VS. TSX and have seen great value and upside in the Hang Seng.

 

Hang Seng

 

PE Ratio: 10.55

 

Forward Basis: 11.02

 

VS.

 

TSX

 

PE Ratio: 15.3

 

Forward Basis: 14.08

 

Canadian managers are most enthusiastic about emerging markets equities, with 62% holding a favorable outlook on the asset class

The evaluations on a forward basis for the Hang Seng in this example provides great value to investors with long term growth horizons.

Fundamentals of EM space is undeniable  with 75% of Global growth coming from EM Space and when by 2030 EM will represent close to

55% of global market cap, no surprise PM’s alike are bullish on this asset class.

 

As IA’s build portfolios they must keep in mind the opportunities and great evaluations to  have their clients situated for long term growth

Potential in economies that will soon be recognized as the largest in the world.

 

Written by Sam A.

http://www.advisor.ca/investments/market-insights/investment-managers-turn-to-emerging-markets-russell-91422


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Retailers Expand into India, Starbucks and Wal-Mart Lead the Charge!

Last week the Sensex increased 404 points in one day on the news that India was opening its doors to foreign companies. India is currently going through its industrial revolution as we have seen with developed countries such as the US and UK. The average age in India is 25 years old and has a population of 1.2 billion people. As more individuals enter the workforce and India becomes more urbanized individuals will be earning more and consuming products such as housing, cars televisions etc. for the first time. By allowing foreign retail firms into India will speed up the process in its development.

Wal-Mart was the first multinational company to jump on the news that India is opening up its doors to foreign retail markets. Wal-Mart plans to be operating in India within the next 12 -18 months. Last week there was an announcement that foreign firms will be allowed a “ majority stake in multi-brand store for the first time.” Prior companies such as Wal-Mart were only allowed to operate as wholesale outlets. Opponents are worried that this move will hurt India’s job market and mom/pop shops. Advocates believe this will open India’s doors and attract new business as well as decrease current food prices.

Following Wal-Mart, Starbucks announced it’s going to open its first outlet in India by the end of October. Starbucks has been looking to expand globally targeting Asia, particularly China. They expect China will become their largest consumer outside the US by 2014. In India “ coffee has changed from becoming a traditional beverage consumed mainly in South India, to a mainstream beverage nationally. (Panchal, 2012)” Part of the reason is due to the fact that there have been lifestyle changes and rising incomes. Taking into account the population size, growing popularity of coffee and rising incomes India is expected to be a large market for Starbucks in the long-run.

Sources:

Kinetz, E. (2012, Sept 21). Wal-Mart to open retail outlets in India within 18 months after gov’t allows in foreign firms. Canadian Business. Retrieved September 24, 2012.

Panchal, S. (2012, September 28). Starbucks to Open its First Cafe in India Next Month. The Globe and Mail. Retrieved October 1, 2012.


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Starbucks going to open its first outlet in India by the end of October!

Starbucks said it’s going to open its first outlet in India by the end of October. Starbucks has been looking to expand globally targeting Asia, particularly China. They expect China will become their largest consumer outside the US by 2014. In India “ coffee has changed from becoming a traditional beverage consumed mainly in South India, to a mainstream beverage nationally. (Panchal, 2012)” Part of the reason is due to the fact that there have been lifestyle changes and rising incomes. Taking into account the population size, growing popularity of coffee and rising incomes  India is expected to be a large market for Starbucks in the long-run.

 

India and China have two of the largest populations in the world. Recently , India announced they were opening their doors to foreign retail markets. Multinationals have been taking advantage of the growth potential in China and are now able to expand their reach into India with these new regulations. The Excel Blue Chip fund is the only Canadian mutual fund that focuses on purchasing  these multination’s  as part of its overall holdings. Clients who are looking for growth but are nervous to venture away from North America would benefit from owning this fund.

Written by Jeff K.

Panchal, S. (2012, September 28). Starbucks to Open its First Cafe in India Next Month. The Globe and Mail. Retrieved October 1, 2012, from http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/starbucks-to-open-first-cafe-in-india-next-month/article4573990/


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Green BRICS

Investors are starting to realize that through the European debt crisis; most emerging market countries took the time to re-organize their economies, maximize efficiencies and are now better prepared for the next phase of growth. These measures have included greater debt-servicing measures, managing inflation rates and developing more sustainable resources for long term growth.

The emerging markets have immense numbers of urbanizing, educated and wealthy youth with ferocious appetites for goods and services. A massive manufacturing industry is not anything new when reading about China or India; however, reading about renewable and sustainable energy with international recognition is new to many BRIC investors.

Above and beyond the clear positive environmental effects, these initiatives speak to a maturing in BRIC country leaders. It speaks to leaders that realize with over 70% of the population of which 45% are under the age of 25, a short or even medium term plan is not enough. Most importantly it speaks volumes to investors across that the BRICs are continuously evolving to accommodate long term growth.

The emergence of the BRIC nations as global powerhouses is in full swing and their long term growth is being enhanced daily – where are you invested?

Written by Jeremie C.

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