Bull Vs. Bear: Emerging Markets |

Bull Vs. Bear: Emerging Markets

In the third and final installment of our bull-bear blowout, we take on the issue of emerging markets and how they’re going to perform in the next few years. Renowned bear Gary Shilling, the head of A. Gary Shilling & Co. and a Forbes columnist, lists emerging markets as one of his key areas to avoid for the current year, a call he also made for 2008, when it proved to be spot-on.

Shilling believes emerging markets are in deep trouble because their economies are so dependent on exports, meaning that, as goes the U.S., so go these markets. And as we’ve seen, it’s not going so well for the U.S.

He specifically sees China as one area to avoid, because its middle class, even though it’s 110 million strong, is too small and under too much pressure to support the nation’s economy. Adding to the stew, civil unrest is a real concern here as jobs disappear and too many men–the result of the nation’s widely disparaged and anti-female One Child policy–look for things to do. Shilling predicts all this could amount to the end of the Mao Dynasty.

Robert Froehlich, it goes without saying, sees emerging markets, and specifically China, in a different light. The recently retired chief investment strategist at Deutsche Bank’s DWS Securities sees a lot to like in China, including the government’s commitment to infrastructure spending, some $600 billion.

He’s also very keyed up on how much spending the government is prepared to do in order to ramp up for the 2010 world’s fair in Shanghai. As for emerging markets in general, he sees it as the second best place to invest outside large-cap U.S. equities and that it should have a strong 2009.

http://www.forbes.com/2009/03/11/shilling-froehlich-china-intelligent-investing-bull-bear.html

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