John-Paul Smith, known for predicting Russia’s 1998 crisis and for his bearish call on emerging equities at the end of 2010, is bearish on emerging markets because of the increasing role of governments in business across the developing world – usually via holdings in listed companies which are then used to further the state’s policy objectives.
A recent example includes the money-laundering charges against Russian businessman Vladimir Yevtushenkov which many see as a possible play by state-run Rosneft for Bashneft, an oil firm owned by his company Sistema while in Turkey, shares in Bank Asya have tumbled around 40%, which the bank attributes to a systematic government campaign to undermine it.
Smith recently left Deutsche Bank after a four-year stint and has teamed up with Emad Mostaque, who was his colleague at Pictet Asset Management before he left in 2010 to join Deutsche, to form Eclectic Strategy which will provide advisory services on emerging markets to clients.
To read the whole article, Emerging markets veteran to focus on governance risks at new consultancy, go to the website of Reuters.
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