We’re seeing a lot of great opportunities in emerging markets today. As the middle class gets wealthier, they’re using their newfound consuming power on many different things.
This includes everything from baby formula to water, to Starbucks coffee, to foreign travel and education. And this presents a real opportunity for investors. Education is a really important theme: as parents, you get wealthier, you want to make sure your only child gets into college, so that he or she can get a white-collar job instead of a blue-collar job. So, you’re going to spend a lot of money for education. And for example, if you find a tutoring center—company—that guarantees that you get into the best universities, you’re going to be willing to pay up a lot. And as an investor, that’s another example of an opportunity.
When you think about China, for example, the transition in the economy that we’re seeing is not the first time that we’ve seen this in history. Japan has gone through the same thing, Korea has, and Taiwan has. It’s only natural that first you develop the industrial sector, and later on, the consumption sector grows. And that’s what we’re seeing. There’s nothing unusual about this. I think this is a decade-long trend that will continue, and we’re going to find a lot of opportunities in that.
The government is working hard to control pollution now. And there are going to be many beneficiaries out of this. We’ve seen the government try to shut down obsolete capacity in industries ranging from steel to glass to paper. And that’s going to have a positive impact on commodity prices, and that in turn is going to have positive effects on the banks who’ve been lending money to these guys. There also are the beneficiaries like clean-power technology players, as well as any sort of fuel-efficiency–related products.
These two megatrends that I talked about, is a really powerful tailwind for many of the industries that I look at, so if I can find great companies that are benefiting from these two megatrends, bingo, you’ve got a great idea.
