Around the World With ETFs

South America, Latin America, Africa. And so I wanted to take this episode of Trillions to sort of talk about um an investing lens that's different than one that we usually talked about because we haven't done this on the show yet, talking about countries outside of the developed world, right, Yeah, So this would be emerging markets and then frontier countries, which is sort of like the there's actually like official classifications. Yes,

that's right, and and some get promoted. Uh, you know, it does remind me of you know, freshman year, j V and varsity in terms of the way it took a three pronged system. But in the immerge, NG and frontier areas there's a lot of opportunity, there's a lot more volatility. Just to put some numbers on this. In the e t F world, emerging markets e t F s as a whole, like when you invest in the whole region at once, have a hundred and seventy four billion, that's a lot. That's six of all e t F assets.

But the countries when you go into a specific country and emerging markets, those e t f s only have forty one billions, So that's just over one percent of the assets. And most people who do who use those are traders. But I mean, mom and pop, if you are very interested in a country, uh that's you know, way out there, way developing. E t F serve up almost all of them at this point that are investable, from Vietnam to Argentina to Egypt. Um, there's just one

for Pakistan. Uh you can now and and back in the day, this was very difficult to get local shares of these countries. You needed to know people. Now you can just buy it, like buying shares of Microsoft. So when we sometimes talk about et F sort of democratizing investing, this is a great example. Now anybody can get these countries. They're literally delivered to your doorstep. Um, and that's one

of the reasons they're fairly popular and growing. Speaking of growing the population of these countries that we're talking about, when you look at um I m F numbers for them. If you take emerging and developing and put them all together. We're talking about of the world's population. So this could be I mean, when you really step back and think about it's like the long term growth plate because there's

so much potential in these economies. Yeah, and the US market is by a market cap is so dominant in disproportioned to the number of people we have. So you're right there, there's a bit of an imbalance in terms of the size of our star stock market and the number of people and the growth potential over there. Although I will say and I hope we bring this up

in the discussion, um there. Look, there are many times when a country has a good story written about it, it looks like there's a lot of growth, the pe is low and it just doesn't go up. In fact, they could go down worse, and so there is a lot of risk. Can't wait to talk about that, and so for this discussion, because yours truly knows the t s very well, but I don't know every single country

out there. In fact, sometimes I have to scramble. It's like doing a book report of talk about Vietnam today Okay, I gotta look at Wikipedia and do my homework. But rather than me doing that, we brought in a couple of experts from Van Eck who are specialists in these countries and do nothing but look at them all day. And if you want to learn more about the New Economy Forum, there's a great new podcast. You've heard it

teased in our feed before. The host is Stephanie Flanders and the name of the show is The New Economy This week Countrilliance all around the World and e t s. We have a couple of guests, Ola, Patricia, Welcome to the show. Hi guys, y, Yes, thank you for having us. So you guys are at van Neck, Can you describe

what you do there? Sure? Um, I'm all I'm at one of the senior analysts on the Emerging Markets Equity fund at Vanack, more on the active side than the ETF, but happy to be here and talk about the countries I look at. And Patricia, Yes, I'm Patricia Gonzales. I'm also a senior analyst Advanik and focusing more on Latin America and a couple of countries in Asia, and I'm very happy to be here. And you know, they are

from the active side. You hear that, So a lot of these shops have both e T s and active mutual funds and so, uh, lunch lunch is really interesting. I'm sure there's some tension you can cut with a knife now, I'm just kidding. Um. The reason that we would get somebody from active side is the E T F product specialists are just not going to know as much because they're out there looking for individual stocks in

these areas. So they're the perfect people for this. Even though we tend to normally have et F people on um they work need work and et F company though, so you're kind of into it a little bit. But yeah, okay, UM, so how do you guys look at the difference between frontier and emerging markets? Because that's sort of frontier is more j V and then you get promoted to or I guess frontiers frontiers spread shman emerging markets. So how

do you guys look at it through your investing went? Yeah, I mean I would say that the classification that most people follow tends to be from the index classification by ms c I. But as far as we're concerned, we really are looking for countries that offer longer term development and growth opportunities. Whether it's on the the you know, emerging side, whether it's on the frontier side, we kind of don't really care as much. UM. Frontier markets tend

to have less experience with foreign institutional investors. UH, some of the liquid you know, liquidity, and some of those markets can be more challenging. UH. Some of the capital market laws are still being developed, so they tend to be a bit earlier stage, let's say, in their cycle of development. So we're always mindful of that when we do our analysis and due diligence on companies and UM and countries. But I think we're looking for opportunity and

we can find that. I mean, there are shared characteristics between both in terms of UM typically having larger populations, younger populations, so a lot of runway for growth going forward. Yes, I agree with with all that. Mean in a particular case, we look at either emerging or frontier UH, and the main characteristic, like she says, a lot of the frontier market UM like the liquidity steel and they have a

capital market that is not very developed. But certainly, like you said, there are still very good opportunities to demographic is there so UM there's a lot of opportunities in both. So with that said, obviously you're just looking for countries a lot of growth. Let's just jump in and talk

about Brazil. An interesting one, an interesting one. This is sort of the like I said, the soccer ball is always landing on one of these countries at some point, and right now it's on Brazil because there's an election and as I tell people, Single Country Emerging Market TTFS like nothing better than a pro business conservative leader elected. Is that right? So walk us through what happened. Because e w Z, which tracks Brazil is up twenty in October.

You know how bloody and brutal October was for everybody else, So that's how much that they really liked this election. And this election was was a little controversial. Civilly had a lot of attention, that's correct. Well, yeah, like you said last Sunday, they had the presidential elections and Jabel Sonado, who was a former army captain and a congressman one at the election. The other candidate was Fernando had that with was part of the Workers Party more on the left,

that was the party of former president Silva. So definitely also NATO the more market friendly of the two uh and and his victory was already anticipated by the market and that's one of the main reasons what we had saw, you know, a very good rally on the equity side over the last month and the expectation that he's going to be very you know, market friendly. I mean, um, the most important thing for him to do is really attack on the fiscal side as some main issue for Brazil.

The fiscal deficity is really one of the largest in emerging market. But he said the right things and I think that's one of the main focus of his new government. So if that's the case, I mean, we can really see Brasilia accelerating GDP growth and in a positive environment going forward. And in the case of something like a leader, is that worth I mean, since the election, it's kind of gone flat. So people were buying the rumors so

to speak. Um, but is is that over bought? In other words, when you're looking to play a single country like this, should you, um, you know, buy in after a rally like that or do you think the fundamental value of the stocks that you analyze are not really tied up to the pricing. Now that there was this sort of like top down buying because of an election. Well, I think the fundamentals of the companies are there, and

I do believe there's still more opportunity. A lot of people are comparing Brazil would happened to Indian two thousand fourteen when Moody was elected president and the equity market had a really you know, big rally and the expectations of UH of economic growth and reforms. So I I do think that if the president do the right things, in particular on the fiscal side, UH, there's a lot of opportunities for Brazil going forward in terms of growth

UM the conditions are already good there. I mean you see that in terms rates are low, you see low inflation, and you have seen some pickup in economic um UH numbers and also on labor market. So I do believe that under the right circumstances, with the right economic cabinet and with the right reforms, I really see Brazil I can really continue rerating and influence continue to come to the country. So with something like Brazil and at the neck, how do you guys try and get exposure if you

if you like what you see, if you like those conditions. Yeah, on our particular case, we are we are very bottom up. Like we alla mentioned, we're on the active side. Uh So for us, it's very important to find companies when we we will see visible and structural and growth in profitability. And we continue to see that in many sectors within Brazil and education sector, healthcare sector, um and and like and like a beilieve evaluations are are still very reasonable.

Uh So we we continue to find very good opportunities there. And if you look at Verdeck, I know you guys are on the active side, but Vanneck has a Brazil e t F. It's a small cap one the tickers b RF and I do find after when these elections are happening and they're sort of positive for the market,

the small cap will zip up a little faster. Do you go and look at small caps too, because the big, the big single country e m ets tend to be dominated by the bank's financials and you've got to go down to the small caps to get a more broader swath of the economy. Is that right? Is that correct? Because usually, um, you know, the small cap are the

ones that represent a lot of the smallest sector. I mean, like you said, the majority of the or the companies that have the largest way on the index, normally the banks, but also like Petro Brass or the ballast and and we've really find the opportunities are in in some of these small caps and like a small healthcare companies that are taking opportunity of of of the market, and or education companies like like I mentioned in the past. So I I do believe that a lot of the opportunities,

specifically domestic opportunities are within the small caps. Although you definitely have to take something before you buy this because these things are volatile. Both the b Z and b RF are three or four times of altility of the smp FISMA. Is that what you take before you Yeah, you can get something over the counter. You don't have to go that you don't have to go you don't have to go on the streets for this. I mean

it's not like bitcoin or vex, tivix or anything. Okay, but yeah, there's definitely a lot of about the stomach this vulatility. That's the downside, that's the that's the the cost to potentially get in the benefit from this, right, that's correct. Yeah, Well, the issues sometimes with some of these smaller caps of liquidity so that's why if you want to build a position or exit a position um with the lower liquidity, that trands to create more volatility.

But like Petree you mentioned, if you are investing in emerging markets and you know, as we talked about, with favorable demographics, you want to get exposure to some of these more domestic themes because even though they're smaller companies, they tend to probably offer better valuations and higher growth over time UM and they tend to be less correlated with global events. So if you take Petrow Brass, that's really moving much more with the you know, global commodity

cycle rather than with the fundamentals of Brazil domestically. So I mean that's why we we tend to find more interesting ideas and also less um covered some more unique, adducing cractic ideas in the smaller and medium cap space. How long will you hold a position in someplace like this where there is this much volatility, you see that there's opportunity, How long will you bury in the hold

on the something that you believe in? Oh, I mean we're long term investors, and when their structure growth and and especially like the small cap that are in in in sectors that are more domestic. Um. You know, usually they're UM. Irrespective of what is happening in the country,

we continue to see a very good growth. So you know, if the fundamentals of the companies are there and we continue to see that, definitely we were long term investor, unless unless the story change and you know, then that's a different situation. But and when you see long term,

what's that horizon look like for you? It can be up to a one three years or definitely well, you know Gunlock said by India and don't look at your statement for thirty years, So there's there's a long long term Definitely, that's definitely a way to deal with the votility because you just don't look at it. Um. But you have to really commit to the country. In your case,

you're you're one to three years long term for you. UM. And in the case of Brazil, did the election confirm what you already knew or did it actually like make you buy a little more of the country. Oh well, definitely were more positive um than now. We gotta oppress then and it's more market friendly. There are still uncertainties because I mean his his brand new he's somebody that is rather a way to the right, so we don't

that's right. This is like the farthest right has done is a former military So we don't know what really can happen. We have good expectations and we're waiting to see what kind of cabinets he will have and you know, what are the kind of policies that he would put in place. But definitely so Brazil is not the only country in South America. We talk about the rest of the gun. Yeah, another interesting country. I think we can we can talk about it. They also have a very

interesting but it's a small country. A lot of people don't look at it. Uh, it's a small part of the m c I and this part is a very interesting country. Is the fastest growing, one of the fastest growing in the region. It's actually a really interesting one in relation to the ms c I index because it didn't get down, like the percentage dedicated to the index in Peru shrunk traumatical well, because they didn't have enough. The liquidity that the market cap is is not that big.

It's not that big, that's correct. I mean the largest constituent is a credit card, which is the largest bank there. And the you have another couple of company, who is this Southern copper and when I went to but yeah, definitely there's not a lot of name within the you know, the whole basketball metaphor with freshman to JV to varsity. Sometimes a country can be a big deal on the freshman team and then when it gets promoted, it's like ninth man on JV. And that is Peru. It's only

point four four percent in the MSc Emerging Markets. Israel is a good example that dominated the emerging markets, not dominated, but it had a good waiting and it's basically lost now in the developed world. Um, but what's interesting is EPU, which is the I shares Peru ETF listen to returns on this it's up six in three years. The SMP is up thirty six, and the Emerging Markets Index as a hole's up six. So Peru s and yeah and

tripled its own index. So in these cases you kind of have to use a single country, right if you want to get exposure. And why is it up that much? What's going on? When we look at Peru, it's a country that depends a lot of metal prices for their growth, and I mean you can see that their second largest producer of copper, silver, the third largest producer of sink. They also produced gold. So, I mean metal prices has been in a very good recovery and that have really

helped their GDP on the growth. And when we look at at the index, a lot of the companies are commodity companies UM, so definitely they have had a good performance. So if PREW has been a bright spot, and especially bright spot, what's been not so bright Well that's the case of Argentina. Argentina is a completely different case. Actually, back in June, the m S A I in this UM included Argentina, which was a big deal. It was

a big deal. It was a big deal, but unfortunately it came during a time of a lot of volatility for for for Argentina. You know, the changes that they were happening global and domestically really made Argentina in a very vulnumber of state. I mean it's a country with a high twin deficits and you know, like tier global liquidity, they had a drought, all the things, you know, created the perfect storm for them at the same time that they were being upgraded or graduating for you know, to

to the emerging market. This thing is down thirty this year, which is the year it got promoted, right, Yeah, that's correct. Well, they they announced that they will be promoted, so yeah, usually it takes like six six months when with the announcement back in June May June this year, Yeah, it didn't really do much. This this is and that's you know, this is why some people do try to play that promotion because they're anticipating all this foreign capital coming in.

But it doesn't always work. There are macro issues that which can trump that game. And if there's one place that foreign capital has reservations about, it tends to be a Yeah, there has been a rollercoaster Argentina over the years. So as an investor, who can you know, look at a continent like this and see that Brazil has this long term opportunity, Peru's having out performance, Argentina's um not not doing as well as as you might want. How

do you put put your thesis together based on those factors? Well, definitely there there's more postive macro news in like in Peru and Brazil. But in the case of Argentina, I mean we saw that under this situation that were able to um uh have find a loan from the i m F for over fifty billion, which we really cover a lot out of the financing needs or a few over the next few years. And they're doing the reforms

I mean around right now. We've started to see some stability on the currency and and expectations are that hopefully things will get better. But there's another issue that all this is happening at the time when presidential elections will occur next year, so definitely we don't know what could happen in that sense. There can be a lot of volatility, in particular that thinking that they all uh political party, the curisioners of the Petal News that you know, will

come back to power. But there are opportunities and and Argentina, I mean it's it's a country in particular when you look, uh demographic is very good, there's a high middle class and and very low pennetuation of banking. So opportunities are there just on the on the you know, better environment, or at least see that things starting to move in the right direction. Okay, I want to turn the globe slightly,

and we're gonna turn from South America to Asia. There's one country in particular, I want to talk about in Asia, which is South Korea, and South Korea is classified as an emerging market and it's been stuck there. Eric, it's like perpetual JV. It's like the guy who can't get onto the varsity squad. What's going on there? Yes, so South Korea is considered developed in the foot see line of indexes, but in the M S c I it's still emerging. It's the rare country that has different views there,

but most people use MS, so they considered emerging. And the reason it's still there. Remember we talked about this a couple of weeks ago and we weren't sure. Um I got a tweet and I'll give this guy credit quant of Asia. He's actually a good follow Um. He says. South Korea is still considered an emerging market because of capital controls and investor I D requirements can't buy REA stocks um in certain ways. So I think that's it's not the country itself, it's these regulations and controls which

is holding it back. So what are the other Asia E t F that you keep an eye on, Well, Taiwan that's that's one of the bigger ones. That's an eleven percent waiting in the emerging market. So for most investors, they're getting plenty of Taiwan in their broad one UM.

But then you know, you've got countries that have less waiting, like a Vietnam that is very underrepresented in UM a lot of these indexes, and there is a market Vectors has the Vietnam ETF which is million actually, but there's UM it's such a hard country to get to get local shares in that. I believe you guys limit creations now and then because like if there's a rush of creations, you have to limit them to to a day or something. But regardless, if you try doing that on your own,

you'd have a lot of difficulties. So, uh, you do you have Vietnam. Here is an e t F that's available, and let's look at what it's doing year to date. Um, it's down fourteen point seven. I mean, everything we've brought up today, with the exception of Brazil, is having a rough year. I mean it's just been a rough year. Remember the US was beating everybody. Now the US has gotten its big haircut. It's down to zero this year. UM. But all the other stuff was already in the red

Brazil's the really the only outline. Well, no Peru that that it had a rough year too, that return was over the long term. Okay, I'm gonna twist the globe slightly to Mia and this is all his wheelhouse. So what are the countries that most interest to you? Yeah, I think one of the countries that we like at the moment and that that's a bit of its own

story is Egypt. Um. If you recall, you know, in twenty eleven, with the airb spring, the country went went into a phase of political instability and a lot of change, which also had economic implications, so the growth slowed down. Um. You also had a lot of your foreign currency sources disappear, basically foreign investment, even tourism because of the turbulence and all of that. So what ended up happening is the country's foreign reserves were depleted and that created further uncertainty

because you also had some issues with capital repatriation. So if you had invested at the time, you got stuck on your way out. So that created a lot of risk aversion against the country and it was a very

difficult time obviously. Um. That changed in the last few years after we had um, you know, we entered a more politically stable environment with the election of presiden c C and after that some more market trendy policies were adopted, uh and namely, the main thing that happened was a significant adjustment of the currency value end of twenty sixteen, so the currency ended up losing half its value and you know, effectively being freely floated, which was a problem before.

And that was kind of a trigger point for foreign investments to start coming back, especially because at the time when the country did that, we also I'm saying we because I'm Egyptian, so forgive me sometimes I'm like from a t F, We're with you. Egypt basically managed to secure also an i'm F package, and that tends to be something that provides comfort and confidence to to foreign investors in particular because what comes with that is a

package of reforms. So we started seeing a floating currency regime and I'M a program that basically man dated fiscal consolidation, which was a significant problem that the country was was facing. So naturally that put the country on track, um for a recovery process. It doesn't mean it came without pain. So twenties seventeen right after. It was a very difficult year because with the currency devaluation comes a lot of

inflation because the country is quite dependent on inputs. Also, that means that the consumer came under pressure, so you had a lot of you know, difficulties was on the companies with cost inflation, higher interest rates, higher inflation overall, and a weaker consumer. But the good news is um but yeah, the good news is interact. Yeah you saw.

You know, Egypt as a case in general has always been interesting for investors because, you know, similar to what we mentioned before about a lot of em and frontier countries, hundred million people, very young population so roughly fifty percent of the population is younger than twenty five years old and also very underserved, and you have consumption per capita being quite low on very basic goods like milk, like you know, the most basic of consumer products. So there's

a lot of growth opportunity there. So with this reform package that started UM, foreign investor started looking back at the market and we started seeing influence first on the fixed income side, but also in the equity market as well. The valuations remain quite reasonable, so now you're starting to see GDP growth recover again getting closer to a five percent level. Um inflation after twenty seventeen is starting to

be on a declining trend, which is obviously positive. Interest rates are still high, so we haven't really seen a lot of capital expenditure by companies yet. But what the companies have been doing is paying back their dead managing their costs, and so trying to get like very efficient with how they use capital and how they manage their

cash flows. So we are actually setting up for a period where you start seeing um consumption recovery in a more significant fashion, companies that are more efficient and ready to invest, and valuations that are very reasonable. So Egypt is trading at a discount to the broader e M, even though if you look at the growth rates there are significantly higher than what the broader e M offers

in the next three year period. So we like to usually look at tag Grady show, which is how much you're paying for every unit of growth, and in Egypt's case, I think it's around point five. Now you said you just made this strong case, let me push back little bit. So there's an a t F e g PT. It is down big this year, and it looks like It's been a struggle for the past couple of years, a couple of nice spikes, but I mean, when when will

this pay off? Are there bigger macro issues that sort of suppress everything you just said, I mean, I think I wouldn't say there. So I've mentioned that we're coming from a very difficult period, right, so I'm always looking forward. Twenty seventeen was difficult because for the country to stabilize the currency after the devaluation, the central bank had to go ahead and hike interest rates quite significantly, and that

put pressure on companies as well. Um Even though broadly speaking the Egyptian companies are under leveraged, but you still suffer from like higher interest rates or higher cost of that, a weaker consumer um and just cost inflation. That was very significant. Now, I think we're coming closer to the end of that period and you're bound to see the recovery we were hoping, and I think that that holds

true for the broader investment community. We were hoping that interest rates would start coming down faster than what we are actually seeing. Unfortunately, because the country was subsidizing fuel

prices and has been gradually eliminating these subsidies. When oil prices increased again this year, that put again some pressure on the on the physical side of things, and forced the country to go through further subsidy removal, which again you know, affected inflation and made it harder to bring down the interest rates as fast as we were hoping.

So I think once we passed through the spirit and you start seeing interest rates coming down and companies going back to an investment cycle, then you should start seeing the market also react more positively. This is why people outsource this to mutual funds and ETFs. That is very complicated. It almost from is your pilot going over all the things in the cockpit, like what did you say? Um, no, it look this is very important. Egypt, by the way,

is even more lost than Peru. It's only a point one four percent waiting in emerging markets, so you're just not getting Egypt if you're out there pretty much unless you use e g PT, which, by the way, during the Arab Spring, this e t F was famous because it um the stock market closed for two months, right, and the e t F traded and that that's Sometimes the e t F becomes like a futures contract on a market and then when the market opens, the prices

usually come back up to where the et F was trading, even though it looks like the e t S trading at a premium. Now this does lead us to Africa as in general. Sometimes it's called us like the lion uh in, you know, the Asia tiger, the African lion. I've looked at Africa many times again. Vanneck has another e t F called a FK. It's the only pure Africa e t F. Egypt is a huge waiting Let me give you numbers on Africa, Okay, a f K. This is over the last six years since it came out,

Africa's down. The Emerging Markets Index is up four percent, so flat Frontier Market Index is up thirty um. So Africa has underperformed, and of course the US is crushing all that. It's really like the bottom dwelling area of the whole world in terms of returns, and it's p

is down to what like ten or eleven? I mean, if there's ever if somebody likes bargains, this seems to be like a bargain by what would help the whole continent beyond Egypt actually reach this potential that so many people say yeah, I mean Africa, like you mentioned, it's it's kind of um, it's kind of a continent that's quite interesting, and people always have this hope that Africa will provide a lot of growth opportunity, which I think long term it would just by virtue again of demographics

and how underserved a lot of these countries are. For example, in Nigeria and Nigeria, South Africa can like like there are like even within Africa, like there are some some some places that we think will will rise to sort of like this frontier emerging market level and really be resiliant, right, And I think, I mean that there is a lot of merit to that argument over the long term. So so I'm definitely a believer in the content over the

long term. The issue and and it treaty varies by country, but a lot of these countries have faced their share their fair share of political events and you know, changes in leadership, different things that have in the short term created a lot of difficulties and and and volatility. So if you think about South Africa, when you got Serilier Opposa in office earlier this year, there was a lot of hope and a lot of euphoria around the Ramaposa win.

And you know, I think the issue there is you haven't Given that they have general elections coming up next year, the window this year was difficult for for him to really come through with some of the structural reforms that the country would need to recreate growth and to to become more exciting as an investment destination, and in particular

in South Africa this case. The issue there is also you have a significant domestic investor based so a lot of domestic institutional money that has to invest in South Africa. So for the level of growth that's being offered, South Africa is really not that cheap. So the hope is next year, after we passed through the election cycle, we started seeing some promising structural reform and then we go into a more interesting, hopefully recovery cycle. But we haven't

seen that come through yet. So that's unfortunate. In the case of Nigeria, which is kind of, um, you know, the most in some ways one of the most interesting countries given the just the size of the population and and theoretically this should be a black horse in many ways given that it's also an energy rich country. It

has been very unfortunate. I remember I was in Nigeria in twenty fifteen right after Bohari one and again at the time, there was a lot of hope that you know, he would come through combating corruption, which is one of the most significant issues in Nigeria, given that it's very

hard the corruption scale. And you went through a significant period of high oil prices, but at the same time, the reserves weren't nearly where they were supposed to be from from the perspective of the country really benefiting, and a lot of that is because of corruption unfortunately, UM and he was also supposed to bring back security, introduce economic reform. There has been a sense that there was

under delivering on the part of the Boharia administration. Now again we're going into an election cycle next next year UM in February, with Boharia and another candidate opposition Candida, contesting this election. So I think we're going through a period of uncertainty in Nigeria again. No doubt, oil prices are a bit more supportive this year in terms of

improving growth and improving the availability of foreign currency. But for you to really see you know, an improvement and income per capita, which then is going to be supportive for consumption, you need to see structural reform. So I have one more if we if we started with a political hot potato with Brazil, there's one other country, um, Saudi Arabia that's also been in the headlines recently, So we can book in this with with Brazil and then

Saudi Arabia. So how do you look at Saudi Arabia now through an investing lens, considering all the turmoil of recent weeks in the headlines, Yeah, I mean it's um. It's obviously quite freshened. I mean, I'm not sure I have I know a lot more about anything specifically related to the recent headlines than what you see on the news.

But generally speaking, I mean Saudi again is um in the context of the Mina region, one of the more interesting countries because you know, it's also a very young population and overall wealth leveled and infrastructure development and so on is a bit better than your average emerging market. And you have a market that's actually quite liquid, which is unusual for some of for at least the mean region,

it's it's the most liquid one. The country went through its own share of problems with the decline and oil prices and twenty fifteen, so they were forced to start looking, you know, reflecting at how they run the economy and trying to diversify away from oil over time with the vision twenty thirty, I mean, I think the delivery on that has been maybe a little less than what we were hoping, but I would say high level, probably the worst from an economic standpoint is behind us, because you

did go through a significant fiscal adjustment, at least in the context of Saudi. So overall, going forward, I think we are probably more cautiously optimistic for a recovery. The other thing with Saudi, to your point about, you know, the index inclusion and these sort of graduate graduation events, Saudi is actually now not part of any index, but because of the size of the market and the liquidity there, it's actually being included right away in the Emerging Markets index.

And the announcement came by both um UM MSCI and FOOTSIE over the course of the last few months. So we are looking at an event as well where you're seeing you're you're bound to see index inclusion, and given its size, it's actually going to be a relatively significant weight of the MSc I E M Index. And probably one of the higher weights in the emia region. So you should start seeing a lot more um investors looking

at that. Certainly passive money would have to, you know, revisit the country which it has afforded to ignore for such a long period. So I think some uncertainties for sure. Headlines definitely not great interesting. Well, let me give you the numbers. I personally think in the case of this recent where the journalist was killed, horrible situation. Okay, it was bad, However, it didn't do that much to the

e t F it's up. In the last two years, it did hurt it like a couple of percentage points, but this year to date this thing is still up six te Ola Patricia from Vaneck, thank you so much for joining us. Entrell you can say thank you so much. Thank you guys, No, thanks for listening to trillion until next time. You can find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcast, Spotify, and where else you

like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Weber Show, He's at Eric Faltunist, and you can follow Vanex at Vaneck Underscore US trillions is produced by Magnus Hendrickson. Francesca Levy is the head of Bloomberg podcast Bye