India underperformed emerging markets in general by almost 10% and both mid and small size/cap companies dramatically underperformed the large cap companies.  In a country where almost one billion people are elegible to vote, another successful election took place in the spring and Prime Minister Modi will lead the country for another five years.  Almost $14 billion of foreign money came into the equity market for the year, the highest inflow seen in five years.  A surprise $20 billion tax cut took place in the latter part of the year and the central bank slashed rates by 1.35% for the year as the GDP growth rate declined from nearly 7% to 5%.

China saw an acceleration of foreign capital inflows along with the return of Chinese capital back into the stock market towards the end of the year helped by a combination of further capital market reforms and glimse of light at the end of the tunnel in the China-US trading disputes.  The quarter may have been the start of a new bull market in China. Going forward, with a combination of expected profit growth rate recovery, aggressive policies to support the New Economy, Capital market reforms resulting in the likely more domestic and foreign capital flows in the local markets which should bode well for the A share market that the Fund is focused on.  China is transitioning from the legacy economy of being the production capital of the world towards more and more service economy and more research and development.  GDP has slowed to 6% as a result of this transition and the trade war but the country seems to approach an inflection point where the New Economy is now taking a prominent role in GDP contribution.

Russian equities were among the best in the world for 2019.  Not bad for an economy that remains under sanctions.

We have discussed the strong dividend policy of Russian companies before and now one of the giants in Russia will be even more shareholder friendly in the time to come namely Gazprom. Its new dividend policy for 2020, 21 and 22 will be 30%, 40% and 50% respectively.  Where else in the world can we see this?  Russian companies may produce several double digit divindend yield companies going forward which makes them among the most attractive companies globally for investors seeking high dividend yields.

Domicile: Malta
Source: Bloomberg LP