The world’s 25 fastest markets account for only 0.4 percent of market capitalization in the world’s stock markets, but also make up 30 percent of the world’s population, Thanassis Mazarakis ’84, COO of Southern Star and former president of Chase Merchant Services, said in a panel discussion Friday about the best investment opportunities. Of these 25 markets, 23 of them are “frontier,” or nondeveloped, markets, he explained.
These markets represent a prime investment opportunity in the coming decades due to their expanding middle classes, he said.
Mazarakis, who has managed business investments in Nigeria, gave the example of a flour mill with which he had been involved as an example of the potential for high investment returns in developing countries.
“[Nigerians] never had bread in their diets, and now that small investment has resulted in the second-largest flour mill complex in the world,” Mazarakis said. “The Nigerians never ate pasta. And yet when the population is urbanizing, they don’t have time to sit down and have a home-cooked meal … and suddenly the growth of pasta has increased ten-fold over the last seven years.”
Mazarakis also said that the conversation about whether to bet for or against 30-year Treasury securities was troubling.
“What the narrative misses is the fundamental shift taking place in worldwide economies,” Mazarakis said. “We can spend the time of the best and the brightest figuring out whether the next three months we should go long or short with the Treasuries and miss the unique, once-in-a-lifetime opportunity to think about how we can create real growth in emerging markets … And with real growth comes real employment, comes educational growth and comes enriching of nations.”
Ahmad Al-Hamad ’94, managing director of Asiya Investments, also said he was investing in longer-term business opportunities, but focused his investments on Asia. Some of his investments included private health clinics across China, and educational preparatory and tutoring programs in India.
“China is not an easy place, but it’s reforming,” Al-Hamad said, adding that his firm’s strategy for minimizing risk was conducting hundreds of face-to-face interviews that were knowledgeable about the investments in which it was interested.
Al-Hamad also noted that Chinese stocks in general were trading at only six times their valuations, and that banks’ stocks in particular presented a particularly attractive investment opportunity.
However, there are a number of American stocks that present attractive short-term opportunities, Craig Drill ’64, president of Craig Drill Capital Corporation, said.
Cutera, an aesthetic medicine laser manufacturer, has no debt and cash of $83 million, and is valued at only seven-tenths of its annual sales, Drill said, adding that the company could be bought out by the end of the year.
IPG Photonics, another laser manufacturer, has a 75 percent market share of its niche market, and its stock may rise in the future, Drill added.
Drill did not disclose whether he held positions in either of the companies.
Ankur Patel ’09, chief investment officer of R2 Macro, said investors need to maintain a contrarian mindset and the discipline to hold onto their assets for the long term.
The panel was held in the Friend Center 101 at 2:30 p.m.