Episode summary
Emerging & Frontier Markets - With Peter Elam Håkansson, CEO & Founder of East Capital.
Money Maze Podcast
· · 44 min · Hosts: Money Maze Podcast · Guests: Peter Elam Håkansson
Summary
Peter Elam Håkansson argued that emerging markets are no longer just a weak-dollar, high-commodity beta trade: they are increasingly about where technological production and growth actually happen, especially in Asia, China, Taiwan and Korea. He said China’s market has been reappraised over the past year as investors have recognized how central it remains to AI, batteries, EVs and chips, with valuations still far below US comparables such as Nvidia and Tesla.
He described East Capital as a stock-picking firm that keeps country weights relatively close to benchmarks but seeks its edge in company selection, position sizing and on-the-ground research. For him, fundamentals mean durable growth, predictable cash flow, and above all governance and ownership quality. He said site visits still matter because you can learn from how a business is run, how people interact, and even whether a factory is heated in winter.
On frontier markets, he said weaker infrastructure, capital controls and currency risk require even more local scrutiny, while FX exposure can be managed mainly through business mix rather than hedging. He also highlighted Eastern Europe, especially Poland and the Baltics, as attractive from a rebuild and near-shoring perspective, and said South Korea, Taiwan and eventually Poland could graduate out of the emerging-market bucket.
Key takeaways
- Peter Elam Håkansson said emerging-market opportunity is increasingly concentrated in Asia, especially China, Taiwan and Korea, because that is where key technology supply chains are built.
- He said East Capital tries to stay close to benchmark country weights but wins by being a stock picker and sizing positions above index weight when conviction is high.
- He said the bond market often leads the equity market, and emerging-market debt strength may be signaling improved sovereign and corporate balance sheets.
- He said ownership and governance are decisive because without the right owners, shareholders do not share properly in value creation.
- He said frontier markets demand more caution on currency controls and governance, but also offer added value for investors who can do local research.
- He said Poland, South Korea, Taiwan and possibly the Baltics could eventually move out of emerging markets as they develop.
Notable quotes
“If you really will want to be part of on of new technology, you have to be in in in Asia and most of the time you have to be in China”
“We are stock pickers, right? That by by nature and that's really where we can add value”
“the bond market is making the right move there. So I think we will see the the shares follow”
“you need to know the owners”
“If it was cold it was a sell. If it was warm it was a buy to put it very short”
How the episode opens
If you really will want to be part of on of new technology, you have to be in in in Asia and most of the time you have to be in China. That's the that's the harsh reality. And we saw it so much and when it comes to wind and uh solar and it's doesn't really pay to look everywhere anywhere else and we see the same now with batteries.
We see the same thing with uh chips manufacturing not maybe in China but then it's rather Korea and Taiwan instead. So you have to I mean this is the part of the world where it's all happening. I think the average growth of GDP for the last 25 years in Poland is 3.8%.
Yes. Yes. It's not China but it's not far from China either and that's here in Europe is 40 million people. We we for example if you look at one of the uh new countries that we have been investing in for the last 10 years maybe is Saudi Arabia which didn't which was not in any indices when we started to invest in it.
What advice would you give a young person thinking about our business? — I think it is a f fantastic business to be in. It's really I mean you are paid to be curious. So I will just uh if you're interested in what's happening in the world, this is this is the dream.
Emerging markets once the darling of the asset allocators world have found themselves increasingly discarded by those same allocators. Initially post the great financial crisis and exacerbated by co such became the reallocation away and the magnetism of the US and its platform technology companies that by the end of 2024 emerging markets were at a 50-year low relative to the S&P 500.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- emerging markets relative valuation
- frontier markets
- em government bond yields
- foreign exchange
- country vs position sizing
Companies and tickers mentioned
- SDG
- SCHYY
- LDOS
- East Capital
- Schroders
- LSEG
- IFM Investors
- World Gold Council
- S&P 500
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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