Growth opportunities aplenty in a sluggish world

Our view is that the global economy is growing slowly, but certain emerging countries are coming of age and some secular themes in these countries are likely standout performers in the coming decade.

Over the next few months, we will be bringing you a brand new thought leadership series sharing our views on;

1. The industrial powerhouses of Vietnam and Indonesia
2. India as a country with the biggest rising middle-class people
3. Energy as a theme
4. Being selective and opportunistic when it comes to China
5. Our Risk Management Process

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2022 has been challenging for global and emerging markets equities. By sticking to our process, a process which I have used for decades, Ox Capital has significantly outperformed the benchmark and peers year-to-date.

Our process is simply this: Find leaders in growth themes, don’t pay up and apply disciplined risk management.

Emerging countries share markets have been lacklustre for over a decade now, point to point these markets are roughly where they were 10 years ago. Valuation is attractive, however, we believe these markets are due for a period of outperformance when interest rates in the US stop going up as within these economies are lots of opportunities with secular growth when there is a lack of growth in the rest of the world, and they are seeing higher inflation.

The new Asian tiger economies of Indonesia, Vietnam and India are undergoing a breathtaking process of industrialisation like other Asian economies before them. Their resilient growth drivers are shielding them from the slowdown in the global economy as their huge middle class is growing rapidly.

Another thematic is energy. Energy is essential for economic development, and big emerging economies are growing rapidly. Geopolitics is making energy supply even less certain and stocks are very attractively valued. We will continue to explore this as a theme in an upcoming edition.

We are selective and opportunistic on Chinese equities. The economy is going through a structural adjustment from properties-led to one that is led by technologies and innovation. During this transition there are still secular growth stories that can become major dominant businesses in the long term. Disciplined risk management is an important part of our process. With this, we have been able to reduce volatilities in the portfolio this year. Our proprietary risk management model, MOAT, flashed red at the end of 2021. The waning of the Covid stimulus coincided with enthusiasm in the markets. The broad equity index shorts protected the portfolio. The semiconductor short forestalled the decline in stocks like Taiwan Semiconductor and Samsung when demand for smartphones and PCs rolled over during the year. Again, we will go in-depth on this process later in the series.

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At Ox Capital, we focus on identifying emerging leaders in growth themes, we focus on valuation to identify the asymmetric risk reward opportunities, we employ disciplined risk management to protect downside.

Managed Fund

Ox Capital Dynamic Emerging Markets Fund

Global Shares

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Past performance is not a reliable indicator of future performance. For Performance of the Fund please see our performance page.