Military Coup!

coup /ku/ [koo]
Meaning: a sudden and decisive change of government illegally or by force
(Courtesy of: dictionary.com)

Threats of a coup in Turkey are not empty bluster. Some might be talking about a country that’s hoping to become a member of the EU in the not-too-distant future, but history informs that the military has forced four governments from power since 1960!

Now some might argue that it’s quite reassuring that the generals are on the side of the secularists - better to have democratic freedoms compromised than to have Turkey slide the way of Iran, perhaps. Though history tends to show that the people will eventually have their way, whether the ruling powers like it or not.

But either way, as the recent coup in Thailand shows, regardless of how well-meaning their political interventions may be, the military are not great economic tacticians. The Thai stock market is among the cheapest in Asia at the moment, but investors still remain reluctant to dive in after several ham-fisted attempts by the replacement government to manage the economy.

However, none of this is to say that emerging markets are bad investments. Fact is: They account for 80% of the world’s population & 50% of GDP growth, yet just 8% of stock market capitalisation. Economic growth is running about three times as fast as the developed countries, while inflation is largely under control - certainly by historic standards.

All this shows why excitement about the long-term case for emerging markets is justified. However, “markets around the world have already priced in this sketch of economic perfection.” Up until yesterday, Turkey was the 11th best-performing stock market in the year-to-date. That’s despite the fact that political upheaval has been threatening for some time.

The massive investment appetite for assets once deemed risky is evidence of a global credit bubble - too much money is chasing ever-diminishing returns. However, the difficulty is always in predicting when such a bubble will burst - and where it will hurt the most when it does. I still recommends diversifying your holdings in emerging markets, which sounds like a reasonable starting point to me - and Asia in particular looks like a good place to start.

Investing in stocks & shares can result in the loss of some or all of your investment. Including selling your Condo, and then your HDB, then your car and motorbike, maid, goldfish, Osim chair, your Man-U posters, even your that 2 little rascals… Never risk more than you can afford to lose or overdraft. Past performance is no guide to the future stupidity you embark. Consult a financial advisor if unsure or blur. I hereby disclaim all liabilities with reference to loss of limbs, lives, or “loo-wee”. Do your own due diligence cos your mom and dad cannot be doing that for you forever. Keep within trading limits of gains and losses and you will keep your sanity.
From: Eaglevestor