by Alexander Green, Chief Investment Strategist
Monday, October 4, 2010: Issue #1358
last week, Wal-Mart (NYSE: WMT) made a $4.6 billion offer for Massmart Holdings, a major South African retailer with operations in 12 other African nations, too.
What’s the attraction?
Massmart operates low-cost, high-volume stores in general retailing, making it a good fit. The buyout will serve as an entry point to the entire continent.
Yet there are risks aplenty. South Africa is only beginning to emerge from recession. It’s plagued by high crime and unemployment and has a heavily unionized work force known for long, sometimes violent, strikes.
So why is Wal-Mart doing this? Because it can’t afford not to…
Why Wal-Mart is Heading to South Africa
Over the past decade, Wal-Mart shares have flatlined, just like the broad market. Yet shares of its major rival, Target (NYSE: TGT) have more than doubled.
Wal-Mart has also lost ground to its global archrival Carrefour. The French-based chain got to South America and Asia ahead of Wal-Mart. Carrefour is even the largest international retailer in China, the most coveted retail market in the world.
Wal-Mart must move aggressively to maintain growth in a difficult global marketplace. And so must investors who want to achieve financial independence in the years ahead.
Five Reasons Why You Need to Invest in Emerging Markets
Why should you diversify into emerging markets? The reasons are five-fold…
Why U.S. Growth Will Come From Abroad… And Where You Need to Be
A few days ago, a friend with a local business told me he can’t imagine where – with the domestic economy in a funk and the home refinancing game over – future U.S. economic growth is going to come from.
It will come from companies who are moving aggressively overseas – like Wal-Mart, which has boosted its international sales to nearly one-quarter of the company’s total, compared with just 4% in 1995. It will also come from American companies that are able to service these firms.
Consumers in emerging markets need everything we take for granted in the West: better quality food, clothing, shelter, health care, credit cards, computers, cell phones, insurance and so on.
But make no mistake: Countries like Brazil and India and China are not going to let Western firms come in and just pick all the low-hanging fruit. If you want to reap the maximum benefit from the world’s biggest economic development story, you need to move a percentage of your portfolio into these markets themselves.
That’s the real lesson behind the Bentonville Behemoth’s aggressive South African new acquisition.