General commentary on agriculture outlook in ‘year of the snake (2013)’

The underlying supply and demand dynamics driving the agricultural super-cycle remain unchanged.  The world population has continued to grow, surpassing 7 billion in 2011.  More significantly, demand for food increases further as diets change.  Increased urbanisation leads to higher consumption of processed foods, and protein intake increases as families become wealthier.   In addition, factoring-in the trend for increasing bio-fuel usage as nations try to reduce dependence on fossil fuels, we understand how demand for grains and other foods is straining the world’s ability to produce enough, especially given limitations of resources of fresh water and cultivatable land.  Global stocks of corn for example, as percentage of usage, are now down to only 45 days supply, about half the level of 10 years ago.

Peak food jepeg

We believe the world is approaching “Peak Food”, where the current structure of growing and distributing agricultural product is insufficient to meet growing demand without major systemic shift in how we produce and deliver this product. This systemic shift will occur both as…

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2013 New Year Message – Vietnam

As the year of the Dragon gives way to the year of the Snake, ostensibly a symbol of optimism and reforms, we look with continued confidence for investors in Vietnam in 2013. Again while we do not believe in Astrology, we do believe market sentiment will continue to be positive, with the economy benefitting from structural reforms implemented in 2011 and expected to continue through to 2015. It is important that we look back on 2012 and what our expectations were and what happened.

We expected 2012 to be a positive year for Vietnam. Despite the continued negative press (much of it unfair in our view), political intrigue and a global recession, the VNIndex and various Vietnam Funds ended the year up strongly driven by a very positive first half year performance and a recovery in December. We feel that this sets the base for further recovery in 2013.

Despite the recovery in the stock market the VNIndex still lags its comparators with regard to P/E and PEG ratio. At the end of December 2012, the Vietnamese stock market’s P/E…

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