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Revisiting Seven Sources of Value in Emerging Markets
by Brent Clayton of Seafarer Capital Partners, 3/19/25

Value investing and emerging markets are not often associated with one another. Conventional wisdom says that emerging markets, with their rapidly developing economies and rising consumer classes, are naturally the hunting ground of growth-oriented investors.

Can Value Investing Work in Emerging Markets?
by Paul Espinosa of Seafarer Capital Partners, 3/1/22

This paper tracks the evolution of the emerging markets asset class and describes some of the resulting unique characteristics that make a value investing discipline attractive in these markets today.

Fixing China’s Municipal Bond Market
by Nicholas Borst of Seafarer Capital Partners, 7/31/18

The rapid growth of local government debt in China is a potential threat to the country’s financial stability. At the root of the debt problem is a severe fiscal imbalance that is driven by domestic politics.

Field Notes: Hyderabad
by Inbok Song, Kate Jaquet of Seafarer Capital Partners, 5/21/18

The verdict remains out as to whether recent initiatives in India, such as the note ban and the Goods and Services Tax, will constitute significant steps forward in the country’s quest to become a modern and globally competitive industrial economy.

Field Note: Singapore
by Paul Espinosa of Seafarer Capital Partners, 12/22/17

A recent trip to Singapore revealed several companies as paragons of how to respond to a revenue and profit recession.

On Value in the Emerging Markets
by Paul Espinosa of Seafarer Capital Partners, 8/8/17

This paper seeks to understand if a value investing approach could be viable in emerging markets and identifies the specific drivers of value in these markets.

Emerging Markets Briefing
by Andrew Foster of Seafarer Capital Partners, 4/16/17

Seafarer addresses key questions about emerging markets investing and how U.S. investors can integrate the asset class into long-term portfolios.

On Starting Out
by Andrew Foster of Seafarer Capital Partners, 4/6/12
Judging from the headlines, it would seem an inauspicious time to start a company. The national rate of unemployment is high; the economy might have recovered from crisis, but growth is tepid, and confidence is low; myriad regulations and taxes supposedly stifle entrepreneurship; and our nation is deeply indebted. Many argue the country lacks the capacityand perhaps the willto invest properly in its own future. Whatever the case, it would not seem a particularly hospitable climate in which to launch a venture.

On Mexicos Homes
by Kate Jaquet of Seafarer Capital Partners, 1/20/12
Mexicos macroeconomic backdrop has been surprisingly benign for more than a decade now. The country has experienced stable growth, low unemployment, low levels of government debt and it has managed inflation relatively well, as evidenced in the table nearby. The country also enjoys very capable policy management, a burgeoning middle class, stable mortgage markets, strong housing demand and a wide field of homebuilders to cater to that demand. No one knows whether or when the violence in Mexico might end, but behind the headlines, the housing market gives hope that a stable future lies ahead.

On the Sharia and Islamic Finance
by William Maeck of Seafarer Capital Partners, 12/29/11
The practice of banking according to Islamic principles, or the Sharia - the moral code and religious law of Islam - is relatively unknown within developed nations. However, in many parts of the developing world, Islamic banking is a burgeoning industry. It deserves closer scrutiny not only because it is bringing new and otherwise un-banked customers into the fold, but also because it serves as an alternative model for finance and it may manage certain types of risk better than conventional Western models.

On Money and Confidence
by Andrew Foster of Seafarer Capital Partners, 12/1/11
At this moment, the worlds central banks have undertaken what appear to be coordinated efforts at relief, easing liquidity by boosting money supply. This is a welcome move, as liquidity has been strained. My concern is that while this monetary stimulus is necessary, it is not sufficient to achieve financial stability. Unless confidence is restored specifically, by repairing balance sheet solvency growth will remain tepid, and markets range-bound.

On Mexicos Shores
by Kate Jaquet of Seafarer Capital Partners, 10/25/11
Investors must exercise caution when approaching Mexico. The countrys fiscal position appears to be eroding, and this may induce greater dependence on inflows of foreign capital to cover the deficit; and this in turn may make the peso more volatile. However, with scant few safe havens left and as the flights to quality and liquidity continue across the financial markets, I am optimistic that industrial production in Mexico will be a bright spot in the emerging markets in the coming years.

On Teflon and Emerging Market Currencies
by Andrew Foster of Seafarer Capital Partners, 10/7/11
Investors can distinguish between the fundamental health of EM credit which is, as some have suggested, strong and the still fragile currencies of those markets. Rapid unwinding of capital flows may do quick damage to local currency EM bonds, wiping out fixed income investors expectations for current income. EM credit denominated in U.S. dollars may be a viable alternative. EM currencies may offer desirable diversification, and they may even be a good investment but they remain speculative, and should not be considered a safe haven.

On Flexibility, and Why the World Needs More of It
by Andrew Foster of Seafarer Capital Partners, 9/28/11
I hold no illusions about the gravity of the current sovereign crisis. The intractable nature of such large debts has sapped confidence. Most of Europe is saddled with unsustainable obligations, and a decade of fiscal profligacy has put the U.S. on a trajectory to match Europes worst. The West must put its fiscal house in order. All that stated, I want to be clear about what I view as our central problem today: the world is not growing fast enough. The challenge we face is, first and foremost, one of growth, and not necessarily one of debt.

On Brazilian Investment
by Andrew Foster of Seafarer Capital Partners, 7/15/11
In my last commentary, I presented some basic evidence that suggested that Brazil?s long-term record of capital investment is not particularly impressive. Specifically, Brazil?s rate of ?fixed capital formation? was cumulatively 16.9% of GDP over the past two decades. This is the lowest rate among the vaunted ?BRIICS? emerging markets; it also falls below that of the U.S. at 18.2%. In my view, this figure is both surprising and disappointing. It?s surprising because a developing country such as Brazil should have great scope for productive investment.

On The Importance of Sustained Capital Investment Part 2
by Andrew Foster of Seafarer Capital Partners, 7/1/11
This commentary revisits the topic. It presents basic evidence to support the idea that sustained capital investment is critical in the context of developing markets. The data presented below is gathered from several countries, so as to allow for comparison across emerging markets. Admittedly, the workings of macro economies are highly complex, and drawing detailed conclusions about them is tricky. Nonetheless, national statistics do reveal the general outline of an economy and its underpinnings. That?s how I intend to use the data here ? to make broad inferences only.

On the Importance of Sustained Capital Investment, Part 1
by Andrew Foster of Seafarer Capital Partners, 6/24/11
I have placed greater emphasis on identifying companies that maintain steady investment programs. I prefer companies that are committed to the careful but consistent development of the markets in which they operate. My premise is that such companies are more likely to generate sustained, long-term growth.

On the Uses and Abuses of Discount Rates
by Andrew Foster of Seafarer Capital Partners, 6/16/11
When investors search the world for opportunity, do they value a dollar of profit from Indonesia six times more than a dollar from South Korea? I doubt they do. Yet large and misleading discrepancies can arise when investors rely heavily on discount rates in valuation models to determine the relative attractiveness of foreign assets. Discount rates are useful when determining the intrinsic value of a single asset, but in my opinion, they should not be a primary determinant in the allocation between multiple assets.

On China's Provincial Finances, and the Prospect of Their Reform
by Andrew Foster of Seafarer Capital Partners, 6/3/11
Interesting and potentially important news has emerged from China over the past few days. Reuters has reported on two different stories: first, it announced that the Chinese government plans to shift 3 trillion yuan ($463 billion) in bank borrowings away from provincial governments that are struggling to repay their debts. It appears that the central government will assume some of those debts, and pay some off; and it may force commercial banks to write off the remainder. Second, after a long delay, the government will finally lift a ban on the issuance of municipal bonds.

On Stockpiling and the Commodity Cycle
by Andrew Foster of Seafarer Capital Partners, 5/27/11
Commodity prices have been in a secular bull market for the better part of a decade?subject only to temporary, albeit violent corrections. Three main explanations have been offered for the trend. The first is that demand from emerging markets is fueling price increases, as the developing countries consume tremendous amounts of raw materials in pursuit of growth. The second is that the dollar is being debased, which in turn is stoking inflation in hard assets. The third argument is that the world is facing a crisis of limits: commodity prices are surging as finite resources are being depleted.

Double-Invoicing and the Yuan
by Andrew Foster of Seafarer Capital Partners, 5/25/11
It?s widely held that the Chinese yuan is a ?cheap? currency, and that it is undervalued relative to the U.S. dollar. I agree, especially in light of how expensive some foreign currencies appear to be. However, I would quickly caveat my opinion by clarifying that it applies only to a long-term horizon. If you are looking for pessimism regarding the yuan, there is no shortage of popular arguments against it, but I will leave that aside for now. By examining a little-known practice called ?double-invoicing,? we can observe commercial traders? preference for the yuan versus other currencies.
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