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Investing In Emerging Markets With Kevin T. Carter

Meet The Expert | Kevin T. Carter | Emerging Markets

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Why should you care about emerging markets? What are they anyway? Meet the expert, Kevin T. Carter. In this episode, he makes the case for why you should seriously look into placing a chunk of your portfolio into these untapped wells of opportunity. Specifically, he points to India as an especially promising arena for investors who are keen to do more with their money than just going the conventional routes. He also talks about the risks of investing in emerging markets and what you can do about them. You might get convinced to take a closer look at one of these markets when you’re done with this episode, so tune in!

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Meet The Expert | Kevin T. Carter | Emerging Markets

Meet Our Guest

Kevin T. Carter

Founder and CEO of EMQQ Global

Founder and CEO of EMQQ Global, a privately held investment firm focused on Emerging & Frontier Markets. Kevin is a recognized expert on investing in Emerging Markets and the founder of three NYSE listed ETFs: EMQQ (EM Internet), FMQQ (EM Internet ex China) and INQQ (India Internet).

Investing In Emerging Markets With Kevin T. Carter

I’m very exciting topics we don’t spend enough time talking about in the international markets. That’s what we’re going to talk a little bit about, but we’re going to focus deep down into emerging markets because we have Kevin Carter from EMQQ with $600 plus million entity. All they do is immersion markets. Welcome, Kevin.

Thank you. Glad to be here.

Thank you. If you want to reach me at any given time, it’s (925) 314-8503. I’m in Eliott@ProsperityFinancialGroup.com and it’s www.ProsperityFinancialGroup.com. Ask away at any time you want. Give us a ring and we’ll talk about it. Let’s first define emerging markets. First of all, we’re talking about investing. The reason we’re talking about investing is because we invest for our clients in emerging markets. It needs to be some part of our portfolio. You could argue that it should be 2% or 10%. That’s not what we’re talking about.

Why Should You Care About Emerging Markets?

We’re talking about that the world is bigger than just the developed markets, which is the US, Canada, and the bulk of Europe and Japan. The world is full of emerging markets like India, much of South America, and China. I know it’s hard to believe it. China is still considered an emerging market. The Far East, the Thailand’s of the world, and so forth that sometimes are proxies for China are part of the emerging markets. We’re going to talk about that too.

Kevin, as we get started here, because this is exciting as you define emerging markets and as you look at emerging markets. I know we’re going to spend a lot of time talking about India, because we’re both very excited about that as an emerging market. How do you look at the emerging markets? How do you define emerging markets?

Meet The Expert | Kevin T. Carter | Emerging Markets

As it turns out, there’s no official definition but the best definition we have about the emerging markets is the major index, the MSCI index, which is like the S&P 500, if you will, for emerging markets. If that’s what we define it as, what we’re looking at are basically 46 countries, China being the largest, India again, as you said, Latin America, Africa, Middle East, and Eastern Europe.

The reason that people should care about this part of the world is that 90% of the world’s people live in emerging and frontier markets. Frontier markets are like the junior emerging markets, but this is where most of the world’s people are. About 60% of that is in Asia and about 20% is in South America and Latin America. The rest is scattered around Africa and so forth.

It’s not just the world today. It’s even more of the future because the demographics for emerging markets are very young and their populations are growing. Whereas Western economies, Europe, the United States, and Japan. They have an aging population. Whereas India has a very young population. They’re big and young. The economies in emerging markets are growing twice as fast as the developed markets.

The thing ultimately when you take the whole thing apart, the thing that’s emerging are the people and they want stuff. It’s the consumption that is the big story. You have six and a half billion people. They want all the things that we have and take for granted because we’ve had them for generations. These billions of new consumers want more and better food.

They want more and better clothing, appliances, smartphone, go to movies and take vacations. They want a motorized vehicle and their kids to go to college. That’s the story. When you boil it down, that’s why you should care about emerging markets and why people should be interested in the asset class. People want all the stuff we’ve got.

Kevin, good understanding of it. When of emerging markets and I go back a long way. There’s so much volatility. In one year, it went up 75% in South America, particularly. The next year, it dropped by about seven out, so timing was everything. When my clients think about emerging , they think, “This is good or bad.” They think about China as the emerging market and that is probably the 800-pound gorilla of the emerging markets, too, I’m sure at this point. It’s a very bifurcated feeling a bit bipolar feeling about China.

Some people view China as, “If you’re not doing business in China, you’re missing out on this enormous market.” In the last few years, China’s cleaning our clock. China’s taking over the world and seeking supremacy. China’s going to be the next Japan of the 1930s and try to go to war with us or take over Taiwan. A lot of negative headlines with China. There’s no question about that. Can you be in emerging markets and not be in China?

You sure can and that’s for a lot of the reasons you described. That’s a growing trend. The emerging markets ex-China as a strategy has had subtraction. We have an ex-China strategy as well. Our main strategy invests in all emerging markets and we invest in the technology part, the internet part. If you think about the Uber of Indonesia or the Amazon.com of Brazil. Those are the discoveries that we focus on and we invest in. I’ll tell you why we think that’s important.

We have our main original product invest in all of the 46 emerging markets including China. We have another product that is without China called FMQQ. For any reason you don’t want China, maybe you got China somewhere else but as you mentioned, there’s a lot of people that don’t want to touch China. China is grossly misunderstood and over demonized but for any reason, you can go without China. There’s been a lot of flows into funds that do that in the last couple of years.

China is grossly misunderstood and overly demonized. But for whatever reason, you can invest in emerging markets without China, and an increasingly people are doing that.

Also, there’s a lot of ETFs now that give you access to individual countries or even subsets within individual countries. You have a lot of options now for emerging markets. The biggest problem with emerging markets is the index that people use, the MSCI, which again, people can think of like the S&P 500, if that’s the MSCI emerging markets index, is what most people use if they buy the Vanguard emerging markets or the iShares.

The biggest problem with those ETFs and the indexes is that in emerging markets, historically, it’s gotten better, but it’s still awful. A large percentage of the public companies are government-owned banks and oil companies, so Chinese government-owned banks and Brazilian government-owned oil companies. These are not real companies when it comes to investing. The reason companies have value is because they make profits for the people that own the companies, the shareholders.

The way they grow their value is by growing the earnings. The more money a company makes, the more valuable it is. Ultimately, it’s that simple. The stock market will move around more voluntarily than that line of profits moves. The problem with these government-owned banks and oil companies is they don’t care about growing their profits.

First of all, their corruption is everywhere. You have people basically stealing your money if you’re buying a traditional emerging market fund. The best example of this is in Brazil where the state-owned oil company was being systematically looted by about half of their congresspeople and at least two of the past presidents who went to jail for against stealing your money.

That’s the problem with the traditional approaches. You have all this legacy, economy, and corruption. Think about the Department of Motor Vehicles meets Chevron or the Department, not to disparage a particular organization. Government-owned entities usually don’t operate as efficiently as private enterprise. The chances for corruption and graft are large and you don’t have to look far. That’s the other thing, but you can go without China and increasingly people are doing that. If people are going to look anywhere specifically, it should be toward India.

Let’s talk about India for a moment because India is an emerging market that we’re adding to our growth and moderate growth portfolios very shortly. You can’t help but notice there are billion plus people there. It’s a relative emerging democracy. There’s a lot of graph there too. Let’s not kid ourselves, if you go there, you have to bribe your way to anything to get things done. That’s India. That’s a culture thing. Not just an emerging market thing. They have to get rid of that one day, but they haven’t done it.

China has done a better job with that because if they put you to death, you get caught bribing somebody. It puts into that, but let’s talk about India. I know India, if I’m correct on this, is the largest gold consumer in the world because of jewelry. It’s very culturally correct on there. It is the largest consumer of so many foods that are unique to India by the little things that we think about, yogurt and dairy products.

It’s so monstrous on there and it’s still considered an emerging market because it is an emerging light democracy. It is a democracy emerging with light capitalism. That’s a better way of saying that out there with lots of opportunity. Tell me why you like India. I know I look at India as a country way behind China. Certainly, behind Japan which is developed with lots of opportunity but lots of challenges along the way too that could affect investors adversely.

Let me first tell you briefly how we approach investing then I’ll tell you how that is applied to the India situation specifically. What we do is we invest in, as I mentioned, the internet and eCommerce companies, basically, the Googles, Facebooks, and Amazons of these different countries, the local versions.

As I mentioned, what the big story is, as I mentioned, it’s the consumer that’s emerging. You have all these billions of people that are, for the first time, have disposable income and they want stuff. That’s a well-documented trend that’s going to go on for a long time. There’s two other megatrends that have now come together at the same time. They’re both megatrends that you and I, and likely most of your readers have been part of these trends for a long time. That’s why we don’t think of them as megatrends. We just think about them as part of our life and they have been for a while.

The first megatrend is consumption as discussed. Now, the second megatrend is called the computer. I’ve had a computer for over five years at this point but years ago, I got this computer. This computer was a little bit different. It’s a lot smaller and what’s happening now is that all of these billions of new consumers in emerging markets are getting their first computer now.

These people have never had a desktop computer. The smartphone, which now you can buy brand-new in India for $12. If I was on this discussion six months ago, I would have told you, you could get a brand-new pocket size super computer in India for $50. In July, the Reliance Jio introduced a $12 pocket-sized supercomputer. That’s the second thing that’s happening and it’s still early. Every week, a million people in India are getting their first-ever computer.

The third thing in this story is the internet. I first got onto the internet in 1995 in San Francisco, Marina District with a telephone line and a boat. I’ve had the internet for a long time. It’s gotten better, but guess what? Most of the world never got wired. You’re combining these three megatrends at the same time and because none of these, by definition, these emerging market consumers. They don’t have the consumption infrastructure that we have, meaning they don’t have a bank account, a credit card, and a debit card.

They don’t have a car and a target store. They’re leapfrogging. The consumer in the emerging market is getting turbocharged and is in many ways becoming very quickly more digital than us. If we think about how this whole internet and eCommerce thing started on the planet, it basically started in the Bay Area and the developed world in the year 2000. From 2000 to 2015, we had this S-curve of growth as the FANG stocks, the Facebooks. Amazon’s, Netflix, and Google’s took over our world. That was the first internet wave.

Meet The Expert | Kevin T. Carter | Emerging Markets
Emerging Markets: The consumer in the emerging market is getting turbocharged and is in many ways becoming very quickly more digital than us.

China was the second wave, 2005 to 2020 right on our heels. You had the giant tech companies like Alibaba out of China. Now there’s this third wave coming, which is the India wave. I’ve been focused on this emerging markets for many years now, but early on, it was mainly focused on China. You could see the growth was going to happen and it did. The Chinese economy has grown almost 800% since then and the per capita income went from less than $2,000 to now $12,000.

To be a developed market, you have to get to $25,000. China’s still emerging and it will unless they change the rules of how they define this. China is only halfway to develop. India is still way down, but the stage is set for India to have now its growth period like China did. India looks a lot like China did on paper many years ago. Now the world has advanced such that not only is it going to happen like China did, but it has a chance to in many ways happen faster and indeed, it already is in some very important categories.

Dealing With The Risk

You’re stock-picking. We’re picking you for our portfolios. By the way, I’m talking with Kevin Carter’s of EMQQ Global. They’re an emerging market company that we do business with. We picked our products particularly India and put it into growth and model growth portfolio. If you want more information about why we do that, how we do that, the thought process and information. I’m in (925) 314-8503 or Eliot@ProsperityFinancialGroup.com or ProsperityFinancialGroup.com.

Don’t hesitate to seek more information because this is both exciting and scary for a lot of people because it’s not investing in the US is 500 or 100 or 30 largest companies that so many people are used to in the US. It is very different. You’re not investing the best in London or the best in Paris on your typical international companies as well. You’re now going offshore dramatically.

I’m excited about the possibility of India and I want to talk about the risk because it is a single country which has risks. Not investing in basket of countries like so many other emerging markets and international markets are. We’re focusing down and drilling down into the country with the potentially the highest possibility and probability for success.

We’re trying to get the odds on our side but there are risks there. I want to talk about some of those risks because I want to make sure that when people hear this, they understand that we’re also looking at these risks. We’re not putting a quarter of your portfolio into India as an example. We’re putting 2% or 3% or 4% or 5% in there and maybe we’re being conservative with that. You’ve got to begin with some defense before you just get off here.

When I think of risk, I think of single country risk and democracy risks over there. It’s been a democracy in the world. Not a very democratic area of the world there at all. I think of the US dollar, Bitcoin and crypto, raping and pillaging emerging markets. I think of gold. They bag so much on the price of gold. Gold is everywhere. People said, “We’re having a recession. Buy gold.” Now gold is down significantly again. Let’s talk about the risk.

First, let me give you the big picture risk for emerging markets and I’ll mention a couple of the India risk. Let me also make sure I go through the case for India because it is incredibly compelling. I believe it’s the perfect emerging market. I started saying it might be the perfect emerging market, but now that I’ve been so focused on it. There’s never been anything like it. The risks in emerging markets is many.

Meet The Expert | Kevin T. Carter | Emerging Markets

The world’s a scary and dangerous place. Emerging markets are right out at the front of that. The risks include war. You have the risk of being canceled from Russia. We had a couple or a small handful of Russian internet companies that were great companies and not involved. Nonetheless, because they were Russian companies. They were marked to zero and kicked off the stock exchange. The stocks all got frozen. You have political risk.

I’d say you have in governance risk at the national level with Putin. We can name Russia, again, has been kicked out of emerging markets, but the Presidents of Brazil, Russia, and Korea have all gone to jail or prison for different pieces of malfeasance. You have climate risk in a lot of these places in India. That’s one because of its topography. It’s a very wet country in the Southeast, which is the densely populated. The effects of heat are also making some problems along the river.

Emerging markets are risky. You have currency risk and interest rate risks. The list is long for emerging markets. Let me tell you why India is the perfect emerging market and I’m going to say it with some conviction. Once I tell you why it’s going to keep going well, then I can show you where the risk are because they’re part of it. India has some unique risks that you alluded to, if not in our previous call, our planning call.

Here’s why India looks so good. If you break down, why do we want emerging markets? What are they to start with? Why do you want to invest in them? They got a lot of people, young, fast growing, and they want stuff. They have a growing consumer class. There has never been a country that has those things as much as India does now.

India passed China in April to become the largest population. If you looked at the future projections. Most experts aren’t very good at predicting future things, but demographers are mathematically advanced in the ability to forecast how populations are going to grow. China’s population is going to start shrinking.

When I got involved with China years ago, it had a very good demographic, but now because of the one-child policy, especially. It’s now got a much older average population. India has the biggest population and the youngest population. India has 610 million people under the age of 30. It’s the biggest and the youngest. India has the fastest growing economy on the planet. The estimates for are six to six and a half percent for this year and next year. They grew at 7% for the second quarter in a row.

I’m one of many who think it’s very possible the Indian GDP numbers are going to be higher than our currently forecast, so the biggest, the youngest, and fastest growing and it’s all about the consumer. As we saw in China for many years, now you have a billion and a half Indians that want the same things that China has now got. China went from that $2,000 to $12,000 of average GDP.

All of those things make India the “perfect emerging market,” at least in terms of the checkbox. India has a few other things that set it apart and make it a unique and once in a lifetime opportunity. There’s not going to be another population of one and a half billion people anytime soon in any single country. This is it. It’s happening and it’s happening now. It’s going to continue to happen. The reason that India is happening now is a combination of a few things.

First of all, as I said, governance is your biggest risk in the emerging markets and I cited a few examples. Not even mentioning the Chinese government and all of the tensions between the United States and them. India has the world’s largest democracy. Some people might say it’s not the strongest democracy, but it’s the largest democracy.

Governance is your biggest risk in the emerging markets.

The hero of the story in India, at least at the national level, is the Prime Minister Modi. What Modi has done in his years is take the country and pull it out of its socialist bureaucratic ways. They’re not all the way out by any means, but he’s running the place like a business. He’s very popular. He’s just finishing his second five-year term and he will almost certainly get a third five-year term this spring.

In the years under his leadership, they’ve doubled all of the infrastructure they had for the first 65 years in almost every category. They’ve at least doubled and in some categories tripled, whether that’s miles of highways or electrified railroads. They’re rolling out hundreds of their own homemade high-speed trains. They’re finally getting the infrastructure together.

When I got involved with emerging markets years ago, China and India were neck and neck. The GDP of China per capita and the total GDP was a little bit ahead of India. What you saw China do, every year they got further ahead because they were building the world’s greatest infrastructure to make products, put it on transportation and get it to a boat. Eighty percent of the world’s products go on a boat. They built the world’s best infrastructure to do that.

India didn’t do anything. They sat on their hands, the bureaucracy, and the power grid didn’t even work. You would have all these US and other multinational companies would set up shop there and there would be brownouts at the Intel factory. It wasn’t a very robust infrastructure. Modi has finally got that figured out. He is, again, the most popular leader on the planet. Going back to the risk element, high level leadership is important.

You have high level leadership in the country that he’s there to get things done. He means business and his party is doing a great job. They’ve simplified the tax code. They’ve made it so much easier to do business. They’ve got all of the taxes and tariffs between states that slowed down transportation and lead to this high logistics costs. They’ve eliminated layers of this. it is finally catching up with China on the infrastructure side. Now they’re making a manufacturing products. Apple is going to make 25% of their phones in India. Those jobs are coming from China.

Again, India has a government that in contrast to all of the worst part of emerging markets as the government, you get a positive here. Keeping Modi, and again, by all accounts, he will win a fifth term in the spring. They have no term limits, so he could conceivably go another five years. Certainly, for the next five years, his remaining in place is very important.

Now, here’s what starts to make the India story even more compelling. As some of your readers know, perhaps, India’s got a lot of people in the technology sector. In fact, India has a technology sector that’s older than me. Tata Computer Systems as it was called in 1968 when it was formed. It’s now called a TCS, but they changed the words that the C and S stand for. Tata’s older than I am.

You have the Infosys and the Tata’s. These are publicly traded Indian technology companies that have been publicly traded for 30 years. You have this first wave of technology ecosystem that’s again, it’s almost as old as the US technology ecosystem. You have this incredible reverence for education. You can see in our colleges and our best colleges, there are more Indians getting spots. Half of the Ivy League deans in the business schools are now Indian. Twenty-five S&P 500 companies have Indian CEOs, including Google and Microsoft.

Again, no other country has anything like that. Here’s the secret weapon and this is something that is very important. People don’t quite appreciate what India has built. It’s called the India Stack. It’s also referred to as India’s digital public infrastructure. That sounds abstract and weird and part of the reason because I’ve known about most of this for a long time but I didn’t pay much attention to it or to see how it has evolved. It’s an amazing thing that no other country has. Let me explain what it is. First, let me tell you, what is an example of digital public infrastructure. Eliot, in your life, have you used any digital public infrastructure?

Challenges In Emerging Markets

I’m sure I do. Public infrastructure not digital going way back would be the US railroad.

The digital public infrastructure that I am 100% sure you use today is called the internet. That’s one example and GPS. If you’ve ever used GPS or used your phone to map or order a pizza, you’ve used digital public infrastructure. Those are examples. India has built a series of different pieces to a digital public infrastructure, which they call the Stack, the digital stack of India.

This is something that is genius and no other country developed or emerging has this. Here’s how it started. It started simply in the year 2009. Back then, one of the problems India had in modernizing its economy is that very few people had an actual identity card, an official identification. Very few. Less than half of the babies even were reported to the government and didn’t even have birth certificates.

As you can imagine, it’s hard to modernize an economy when nobody can strove who they are. They had talked about this for a few years, but in 2009, they decided they were going to start a national identity card system. The government of India was going to issue a physical card with a unique twelve-digit number in each person’s photograph for a everybody in the country.

As they prepared to launch it, they asked a man named Nandan Nilekani to be in charge of the program. Nandan Nilekani is well-known. He’s one of the founders of Infosys and a billionaire. He’s the chairman of Infosys, which again is one of the largest of the original Indian technology companies. Mr. Nilekani told the government that he would be in charge of the program, but based on his limited experience with the government, he didn’t think they used enough technology.

If he was going to run this program, which is called UIDAI which translates to foundation. He was going to run the UIDAI program that every twelve-digit number was going to be tied to a human being with fingerprint scans and an eyeball scan, biometric information. I heard about this program. I think remember the biometric information part but this was many years ago and I didn’t pay attention to it.

When they launched the program, it was voluntary. This wasn’t a big brother thing where they came around or the government came around in trucks that made you line up. You volunteered, went in and signed up on your own. That was the beginning of this stack, this UIDAI layer. Years after that, in about 2014, they added a layer, the next layer, a know your customer layer, KYC. That would sit on top of the database with the biometric information.

They started a program and they said, “If you’re in the UIDAI database, you can walk into any bank. You don’t have to have anything with you at all. You can open a bank account in a few minutes with your fingerprints and an eyeball scan. Instantly open a digital bank account.” Again, I knew about these first two layers of the stack, but this was many years ago.

What has happened is that now, over 95% of the population is now in the database and using the KYC layer. They have opened 800 million bank accounts. You have 800 million people that were not involved in the formal financial system at all. Now you have all these people in this database, which allows 800 million people to own bank accounts. A lot of the government programs that used to be distributing cash or food or tickets or ration cards digitized. You’ve got almost complete financial inclusion from almost no financial inclusion. That’s the first use of those two layers of the stack. You gave everybody access to the financial system in a digital way.

In 2016 is when this story started what is looking like this. We’re going right into a very steep S-curve with this and two things happened. The third layer of the stack was introduced called the Unified Payments Interface or UPI. You got ID layer, know your customer layer, and payments layer. When they announced the UPI, I also thought it was very boring. It was a QR code-based payments.

I thought, “I’ve seen that for years in China.” You’re going to have QR code-based payments. I was a little worried that it was a government initiative because the state-owned enterprises aren’t a healthy part of the economy, but I didn’t quite realize it wasn’t a state-owned enterprise. It was just a government initiative, again, led by Mr. Nilekani. He’s the architect of all this.

In addition to being QR code-based, it’s instant and free. It has no transaction cost. You and I could send $10 back and forth to each other a million times and it would still be $10. It would instantly go from my account to your account. They launched that in 2016. The other thing they did in 2016 wasn’t part of the stack, but it acts like it.

In 2016, Reliance Jio launched the first 4G network in India. Back then, in 2016, a lot of people had traditional cheap mobile phones, but all of the carriers were on 2G. Reliance Jio got the first 4G license and spent $25,000 billion to build brand new from scratch network covering the country. When they launched, they had a great offer. We have the only 4G network and if you sign up, we’ll give you unlimited voice calls forever and six months of unlimited free data, then we’ll have the world’s cheapest data after that.

When they launched, they had a bold goal. They wanted to sign up 100 million people in a year and a half. Back then, if you went into the Vodaphone store or one of the other phone stores to get a new phone. It would take about three hours because the Know Your Customer layer has open APIs. Geo stores, when you went in, you didn’t fill out any paper. You just put your fingers down and looked in the camera. They took that three-hour business cycle and made it ten minutes. They signed up 100 million people in four months, 600,000 a day. This was the first time we got the a-ha.

It’s very exciting what they’re doing over there and you’ve made a great case.

It’s such an important part. I want to make sure I explain to people, but the stack is making a lot of these things, commercial things scalable to the whole economy instantly, including credit, which is coming next.

Hopefully, that gets just as quick here. You made a great case for why you love Indian and why we’re putting money into Indian now. I love that. Let me ask you one more question about risk. This has been great for people. We’ve been talking with Kevin Carter of EMQQ Global. They’re a shop that manages emerging markets money and we’re using them particularly in India now because we think the story of India is a great story. If you’ve been reading, you can see Kevin’s passion for India and that’s great.

If you want more information about that, send me an email at Eliot@ProsperityFinancialGroup.com or www. ProsperityFinancialGroup.com. One more question about risk because I don’t want anybody to think, “It sounds too good to be true. Why don’t I put all my money in India?” That is that so many emerging countries are tied to the US dollar and to having a strong dollar. The US dollar goes through cycles. We went through a very strong cycle, what I call a King dollar cycle, when Trump was the President. It’s not a political statement I’m making by any means.

The debt has gone crazy since the early days of COVID. It’s been going crazy for a long time, then it’s accelerated it’s craziness now. It puts more pressure on the dollar and it weakens the US dollar, which makes it easier for countries to export to us and makes it harder for us to export to them and weakens their currency in its own way. We’re in a trend a little bit of a softening dollar until we can get our fiscal act in order and get our arms around debt in a way that’s going to make more sense. How is this going to affect India?

Emerging markets are all always subject to some of these macro risks like currency, interest rates and inflation. It is a pretty good place, physically because what has happened with this digitization is the economy is gone from 95% paper-based cash when the UPI was introduced and now 80% digital. People are paying their taxes finally.

India’s got a pretty healthy financial system and it’s less likely than other emerging markets to be susceptible to risks like the ones you mentioned. The main risks that I see to India are again, Modi. They have key man risk more than any other country. There is a history of a lot of sectarian and religious tension and that’s part of the political situation. You have those risks and again, the climate risk. In terms of macro risk, I don’t think they’re any more subject to them than the emerging markets more broadly. They’re probably, I’d say, less susceptible to those risks than most.

We’ll keep in mind the risk of war that probably would not include India now but could include Taiwan and China. If you’re sneezing in emerging markets in one place, you tend to catch a cold everywhere and that would be included in the US as well if that were to happen. That does happen. Word of warning to everybody, patience. We’ll get through it. You might have 90 days of some ugliness, but we’ll get through all that.

Let me make one additional risk as it relates specifically to our strategy. INQQ which is how we invest in India, which again is to buy the app economy, the travel app, shopping app, and food delivery app. It’s relatively narrow. There’s 25 publicly traded Indian internet companies. It’s diversified within the Indian internet story, but it’s still a concentrated group.

The emerging market internet stocks have been a very volatile group. At one point, we launched it and went down about 50%. The good news is that was a year and a half ago when we launched it and the Indian internet companies had about an 80% crash starting in November of ‘21. That turns into an opportunity because a lot of stock markets are making new highs. I know we had some new highs in the US market. The Indian internet companies are still 50% below their all-time high. This is not a group of companies you’re buying at a high but it’s a group that you can expect to have meaningful volatility in both directions.

This has been great. I’m sold on India. I can see why you’re excited about it. There’s phenomenal opportunity there. I want to thank you for joining us, Kevin.

Meet The Expert | Kevin T. Carter | Emerging Markets

Thanks for having me.

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