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This presentation was given at our annual investment conference and highlights global opportunities in the emerging markets. Presenters discuss investment opportunities in China and India, emerging markets financial services and China's healthcare. Presented by Cabot's portfolio management team: Rob Lutts, Les Satlow and Dennis Wassung, Jr. respectively. These seminars are for discussion purposes only. It is not an offer to buy or sell individual securities or investments. Investors should consider their own individual investment objectives, risks, charges and expenses of their portfolio carefully before investing. Investments are not FDIC insured and may lose or fluctuate in value. Please request our Form ADV Part II for complete disclosures.
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GLOBAL OPPORTUNITIES:Positioning for Success
Presented by:Rob Lutts, President & CIO
Les Satlow, CFA, Portfolio ManagerDennis Wassung, CFA, Assoc. Portfolio Manager
CHINA & INDIA OPPORTUNITIES ABOUND
Presented by: Robert T. Lutts, President & Chief Investment Officer
THE CHINA OPPORTUNITY:Shanghai, China
1990 2010
Cabot Money Management, Inc. | 216 Essex Street | Salem, MA 01970 | 978.745.9233 | www.eCabot.com
By 2020, Asia is expected to have more than 1.2 billion population with a GDP per capita greater than $5,000 USD. This is five times the size of the US middle class!
CHINA:TOP SECTORS FOR GROWTH
Financial Services
Property Development and Management
Internet Applications
Education
Infrastructure Growth
Consumer Spending, Travel, Advertising
IN SUMMARY Both China and India offer excellent opportunities for
value creation in the next decade.
China – is growing faster and has better finances (less debt).
China will open up its financial markets in the next 5-10 years – RMB (Yuan) convertibility and access to stock markets in shanghai will be coming.
India is gaining momentum – India could grow faster.
Expect high volatility in these markets.
EMERGING MARKETS FINANCIAL SERVICES
Presented by: Les Satlow, CFA, Portfolio Manager
LONG RUNWAY: UNDER-BANKED
LONG RUNWAY: MORTGAGES-TO-GDP (%, 2008)
LONG RUNWAY: LOW CARD USAGEEXAMPLE-BRAZIL 2008
1-YEAR LOAN GROWTH AS OF JUNE 30, 2010:
US BANKS ARE SHRINKING THEIR BOOKS
China India Europe US-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35% 34%
23%
3%
-11%
HOW TIMES HAVE CHANGED:BREAKDOWN OF THE TOP 20 GLOBAL
FINANCIALSBy Country (# Of Banks), In $Mln
Did you know…? 5 out of the world’s Top
20 financials are Chinese
Top 2 banks are Chinese
Largest IPO ever was by Agricultural Bank of China in July 2010
Itau Unibanco (who??) is larger than Goldman Sachs and the Royal Bank of Scotland
CHINA (5) 762632.85 31%
US (6) 842920.929999
999 34%
UK (3) 347321.22 14%
OTHER (6) 503000.52 20%
WEATHERING THE STORM:What Storm?
Did you know…?
• EM Financials gained 74% since the beginning of 2006.
• The average US bank over that time period lost 37% of its value.
EMERG-ING MKTS
EUROPE US-60%
-40%
-20%
0%
20%
40%
60%
80%+74%
-45%-54%
CHINA HEALTHCARE
Presented by: Dennis Wassung, Jr., CFA, Associate Portfolio Manager
CHINESE HEALTHCARE THEME
Still A Long Way To Go
China spends only $92 per capita on health care, compared to over $6,700 spent per capita in the U.S.
Chinese healthcare spending has a long way to go to catch up with its peers.
PER CAPITA SPENDING ON HEALTHCARE (US$)
CHINA HEALTHCARE GROWTH 2010: RMB 1.7 Trillion – US$253 Billion
GROWING ACCESS TO DRUGS & MEDICINESESTIMATED US$75B MARKET IN 2010
MEDICAL DEVICES INDUSTRYESTIMATED US$55B MARKET IN 2010
INVESTMENT AREAS:China Healthcare
Medical Devices & Consumables
Drugs, Pharmaceuticals, Medicines
Advanced Treatment Services
Facilities & Hospitals
QUESTIONS
