00:00Our next guest says that we're in the early stages of a new bull cycle for emerging markets.
00:05Joining us now, I'm pleased to say we have Thea Jamieson.
00:07She is founder and managing director of Change Global.
00:10Thea, it's great to see you in person.
00:12Hi, Katie. Hi, Romaine. Good to be back.
00:14So let's talk about that, because in your notes, you highlight these early stages, a new bull cycle.
00:19We've been hearing these calls for a while now, but in 2025, it seems like it actually played out.
00:25So talk to us where you see the momentum continuing into 2026.
00:28I mean, it's been an incredible year in emerging markets, up 30 percent so far this year versus 15 or so for the S&P.
00:36So big outperformance. And we think we're in the early stages because all the stars are aligning.
00:41We're seeing improvement in the fundamentals on the ground.
00:44We're seeing signs of a shift in flows.
00:47And certainly this outperformance is supported by very compelling valuations.
00:52Absolutely. And it's tempting to talk about EM as sort of a block.
00:55But where specifically in terms of regions, in terms of countries, are you seeing the opportunity right now?
01:01I came back from the Middle East recently.
01:04Absolutely phenomenal trip.
01:06Being on the ground is just so incredibly helpful.
01:10And I can tell you that it is the most dynamic region globally right now.
01:14And that's driven by population growth, immigrants, particularly from Europe, moving to the Middle East.
01:21It's driven by massive investment in AI and tech infrastructure to drive productivity.
01:27And it's driven by a real focus on bringing in investment and developing the capital markets.
01:33Can you give me a sense here of where you specifically see opportunities, though, in terms of what you want to invest in that space?
01:39I mean, we can take AI data centers.
01:40We've seen the big build out, Stargate and some of the other big projects that have been announced.
01:44Is that most attractive to you right now?
01:46It is incredibly attractive in the UAE.
01:49And that is because it's a way to drive productivity.
01:53It's real.
01:54I visited with the investors and the local authorities that are participating in this build out.
02:01Just to give you a reference, the new AI data center is intended to be the largest outside of the U.S. at 5 gigawatts.
02:09It's currently underway and all the big tech names are participating.
02:14And the intention there is much more than just providing data to the UAE or even the region.
02:19If you look at the low latency reach, they can reach roughly 4 billion people.
02:25So it's massive.
02:25They have the power, which is cheap.
02:28They have the land.
02:29And now they have a plentiful of labor as well.
02:32What is sort of the push from the top down to accelerate these projects?
02:36Obviously, a lot of people are looking around the globe as this being the AI race, what the U.S. is doing, what China is doing, what Europe may or may not be doing, and, of course, the Middle East here.
02:44Does the Middle East, do some of these Middle Eastern countries have an advantage over the others because of the more top down strategy to this?
02:51Yes, I mean, definitely, in particular to the UAE, their government is considered as very stable, as trustworthy, and a good neutral partner to the East and West.
03:02So combined with the cheap power, solar, as well as land and access to talented labor, there's very limited pushback, particularly in the UAE.
03:13So the Middle East, high conviction for you heading into 2026.
03:18Where else?
03:19You know, when you think about the whole scope of the globe, I know that this isn't in emerging markets, but I see that you highlight Europe in your notes as a place that you visited recently.
03:28So a big part of Europe, Central and Eastern Europe, is still considered an emerging market.
03:34True, fair point.
03:34And Poland is right in the midst of it.
03:38It's a significant economy with a significant stock market.
03:42And Poland today is by far the most dynamic country in all of Europe.
03:47The economy is growing at 3% to 4%.
03:49Historically, it was counter-cyclical because of the attractive labor costs and business regulatory standards.
03:56However, as of late, there are some cyclical drivers.
04:01And those are the massive EU infrastructure funds to modernize and digitalize the economy, as well as a very intentional focus on driving liquidity from the banks to the stock market.
04:16Poland is truly an outlier.
04:18Over 50% of household assets are laying in bank deposits.
04:23So the local government is very intentional and thoughtful about moving that liquidity into the stock market.
04:31I'm curious to get your outlook for the dollar, because obviously a lot of the outperformance that we've seen, particularly in Europe relative to the U.S.
04:38and EM relative to the U.S., has been partly because of the weaker dollar and the effect that that's had.
04:44Does that continue into next year?
04:45Are you anticipating that softness to be there?
04:47So we're definitely seeing some signs of global flow realignment.
04:52For example, looking at deal activity on a year-to-day basis, of course, the U.S. is at the top with roughly $118 billion.
05:02But if you look at six of the top 10 markets are emerging markets, and the combined deal activity in those six is roughly the size of the deal activity in the U.S.
05:14So we're definitely seeing some signs of that realignment.
05:19And that could go a long way.
05:20Another way to kind of look at that is the net international investment position of the U.S. is roughly at $26 trillion, which means a small shift back to those markets.
05:32Let's say we take 20 percent of that, which is roughly $5 trillion.
05:36That is equal to the entire free float adjusted market cap of emerging markets.
05:41So it could be very meaningful going forward.
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