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Seeds of change

Last week we had a lesson on how not to manage a fund-raising exercise from Bradford & Bingley. As the week progressed, worries migrated from the direct effects of the credit crunch to the indirect results. Fears of the consequences of tighter lending conditions, not to mention the effects of higher fuel and food costs on consumers, drove the FTSE back below 6,000.

On Tuesday, I made a welcome return to York where I was able to revisit a radio studio that has probably not welcomed my presence for more than a decade. My task was to explain why bank shares were gyrating to an audience who may not have known what they were doing – or be too interested, for that matter. It hardly helped that a recovery was under way. Asked if it was the result of US buying interest, I had to confess that it was more likely to be bear closing from the hedge funds.

Wednesday saw me chairing the first Cofunds conference to be held out of London. The topic was emerging markets and the tone was unrelentingly bullish. The five fund groups showcasing their wares pretty much covered the globe. Barings’ Khiem Do had flown in from Hong Kong via Paris, having spent a week in China. As I remarked – Beijing, Hong Kong, Paris and now Harrogate. It says it all.

Khiem was unconcerned about inflation, dismissed the Olympics as irrelevant, subscribed to the decoupling theory and believed urbanisation would drive China’s growth. Matthew Finch of Credit Suisse and JP Morgan’s Sonal Pandit delivered the emerging Europe story and were as upbeat as Khiem. Mark Gordon-James, part of Aberdeen’s global emerging markets team, gave a world perspective from the viewpoint of a bottom-up player. He said there were plenty of stocks to choose from and many of them stayed in the portfolio for years.

Then, Fidelity’s Charles Payne made a convincing case for the parts of the globe so often ignored by emerging market investors, including Africa. How appropriate, then, that Cru’s Jon Maguire was on Radio 4’s Today programme later in the week to put in a word or two about Africa. The topic was how best to solve the world food shortage. One speaker believed the answer was more subsidies for small farmers. Maguire said mega-farms should be encouraged. He does, it must be said, have a farm that is far from small in Malawi.

But his arguments were considered and powerful. Of greatest interest to me was his view that the future for Africa could lie in agriculture rather than the exploitation of its natural resources. The problem is delivering water to the growing areas. Provide proper irrigation and your food shortages could be swiftly resolved, along with much poverty.

The week reinforced my impression that the focus of attention is moving inexorably to these burgeoning regions. Yet the macro picture remains clouded, despite those who hold that emerging markets are decoupling. Even if the weather improves this summer, the climate in markets will remain unsettled.

Brian Tora ( is principal of the Tora Partnership


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