Jun 6, 2013

Legendary Investors Bet On Myanmar

One of the biggest emerging market stories in 2012 was Myanmar. Sanctions were rolled back and outsiders finally had the opportunity to invest in the resource-rich nation.

Jefferies' Sean Darby wrote that Myanmar will be the next major global trading hub.

But ethnic clashes between Buddhists and Muslims, which has now spilled over to Malaysia, has cast a specter over the country in the minds of many investors.

"It is a problem that has simmered for a long time and will probably require harsh military measures to quell," Mark Mobius Executive Chairman at Franklin Templeton Investments wrote in an email interview. "To the extent that western nations understand the problem, there should not be any [reinstating] of sanctions."

Mobius has previously said investors should be cautious but that there is "a lot of potential" in Myanmar.

A report from McKinsey titled 'Myanmar's Moment' argues that it's economy could quadruple by 2030 to $200 billion, but it could also disappoint. And one of the reasons it could, is the ongoing communal tension:

"Much uncertainty remains. Investors are actively considering Myanmar, but many want reassurance that the government can resolve ethnic and communal violence, maintain its momentum towards political and economic reform, and ease constraints on doing business.

"Those political and economic choices will determine the sustainability of change and the level of interest from investors and supporters—and therefore the success of Myanmar’s economic transformation."

Commodities guru Jim Rogers also continues to be optimistic on Myanmar.

"We in the U.S. had numerous problems as we were rising toward becoming the greatest success of the 20th century: civil war, many Depressions in the 19th century, few human rights, little rule of law, collapse of 1907, etc, etc.," he said.

"Yet we went on to great success," he wrote in an email interview. "...I am very optimistic on Myanmar, but expect and welcome the various corrections which will come. There will be more."