Musings on Investing

“Emerging Markets” Really Growing Faster?

Nevsun Resources (NSU)

According to the Economist, Ethiopia is among the fastest growing economies in the world, with a growth rate of 7.2%. The USA is “struggling” with a growth rate of mere 2.3%.

The above is, alas, extremely erroneous. Mathematically, you cannot compare growth rates unless they have the same base.

GDP per capita of Ethiopia is US$707. That of the USA is US$57,466. If Ethiopia grows by 7.2%, its GDP per capita will grow by US$51 over the next one year. Over the same period, at a 2.3% growth rate, USA’s GDP per capita will grow by US$1,322.

Contrary to the propaganda, the USA is growing much faster than Ethiopia is; about 2,500% faster.

Over the last three decades, the media, the IMF and the World Bank–through propaganda, virtue-signalling, and political correctness–have convinced the world that the so-called emerging markets are growing faster than the developed world. This simply isn’t true.

I explain this in more details in the speech I gave at PDAC (Toronto):

On investments…

Nevsun Resources (NSU; C$3.82) has received a hostile takeover bid from Lundin Mining and Euro Sun Mining. The offer values NSU at C$5. You should expect NSU to open at close to C$5 when the market opens on 8th May.

NSU has rejected the bid. I am with the management of NSU. In the past, I have written several times about NSU. While the offer for NSU values its cash and Bisha project appropriately at C$1, the offer undervalues Timok project. Lundin has offered C$4 for Timok project. Based on my valuation, I expect to be paid C$6.50 per share for Timok project.

I will happily tender NSU for C$7.50 (C$1 for Bisha project and cash, and C$6.50 for Timok project).

Finally, I will be speaking next week at the International Mining Investment Conference, which will be held in Vancouver (Canada).

Warm regards,

Jayant Bhandari

 

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