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China, Russia and the eternal emerging markets

SAN FRANCISCO — ” A fund manager at an emerging markets conference I covered more than a decade ago delivered a warning to investors infatuated with those markets that aged well” wrote David Callaway in Marketwatch, yesterday.

“Did anyone ever notice that the emerging markets of the 1990s are the same emerging markets of the 1890s?” he said to a surprised audience.

Indeed, despite the growth and modernization of China, Russia, Brazil, India, Mexico, Malaysia and many others, they have always been considered emerging markets, pockets of opportunities for investors and companies willing to brave the political, cultural and social challenges they present.

I’m reminded of the fund manager’s quote again this week while watching Google /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 562.85, +0.16, +0.03%) pull back from China and ConocoPhillips /quotes/comstock/13*!cop/quotes/nls/cop (COP 51.00, -0.02, -0.04%) cut its exposure to Russia by halving its stake in the country’s second-largest oil firm, Lukoil.

Usually it’s just the corruption in these markets that makes it a waste of time for a Western investor or company to get involved directly, and that corruption sometimes stems from a weak or corrupt government. In China’s and Russia’s cases, however, it’s less about corruption and more about government control.  READ MORE HERE.