Yea, I could see some investment adviser using it as a preliminary screening tool, that leads to them dismissing Chile as an investment destination. Say just picking the top 10, 20, or 30 EM countries on the list, and moving on to more specific research on those countries. When asked how they picked them, then saying, "well I started with the world bank report, and then...". It sounds sufficiently like a good source of information that few are going to stop to question the methods used to compile the list.tiagoabner wrote: ↑Sun Jan 14, 2018 11:21 amWhile I agree with your points, there's still the fact that a certain portion of investors worldwide consider that report to be valid, even tough it is full of crap.
Imagine Mr. John Advisor. He's a financial advisor somewhere in NYC and one of his clients asks him for a preliminary report about in which countries it would be a good idea to invest, or something like that. He would need to use some kind of data to make his report, and data from the World Bank and from the major credit agencies seems to be an excelent place to begin.
The fact that the report is full of crap is still an issue, even considering the fact that this is a PR stunt from Bachelet's government.
Yea, I don't think anyone invested heavily in the IPSA or whatever is going to be too moved one way or the other. Perhaps a few ignorant / lazy suckers go, 'dang Chile is in better shape than it seemed, and we are missing an opportunity'. If they did it just based on that, they probably should not be in the investment industry anyway.
The thing I have learned living, investing, and doing business in emerging markets most of my life, is that EM markets are never what they seem. If they were, they would not be "emerging markets" (and honestly I would have gotten bored of them years ago). The level of transparency, is what sets them apart. You need to really lift the hood, and kick the tires, to get a feel for what is really going on. Often just walking down the street, browsing at a store, or having dinner with some locals is more informative than any World Bank or other professional report.
Chile is however I believe in a unique, and strange, position. It is straddling that line between developed market transparency (in macro data terms), and that still developing market kind of 'good old boy network', or distortions caused by lack of transparency or lack of modernization in certain areas. Who you know still counts, and access to information still depends on who you know. You can't for instance open your bloomberg terminal, and get a real read on any particular property market in Chile, and filter for certain criteria with any certainty.
In fact, I am not exactly sure how to describe it, or at least I lack a proper term for it. It is definitely a tangible trait, that most emerging markets seem to struggle towards, but have not obtained. I guess I would put it as, it is that tipping point where everyone has access to more or less the same basic information. Yea, obviously the investors standing around the water cooler in New York, will share tips and privileged information about specific things in the United States or wherever; but, overall, most everyone with a little work could get the same basic facts about the economy, or certain industries, etc. Perhaps why there is such a high correlation between all types of asset classes around the World right now; and, why Emerging Markets in general are slated to be the top performers for the next decades. There is still opportunity in the lack of transparency, or at least fuzzy data of Emerging markets. Chile is somewhere in between right now.