March 15: United Spirits

By Derek On March 14, 2013 Under Uncategorized

This week in Emerging Markets Illustrated we look briefly at gold and the possible price collusion the CFTC is now busy examining. We also note the VIX is flirting with record lows; does the absence of fear mean anything? Another development many have not seemed to notice: flows of “red capital” from China into Korea’s equity market are picking up dramatically, is it real and will it last? The steel industry in China, like an obese gambler in Las Vegas continues to lose money yet expand steadily, we visit the reasons behind this seemingly weird contradiction. Finally, one of the more interesting deals in the emerging market space is worth investigating. Diageo, the world’s largest spirits producer is acquiring management control over United Spirits, India’s largest spirit maker. What happens when India’s flamboyant answer to Sir Richard Branson, Mr. Vijay Mallya (“The King of Good Times”) meets corporate UK? After looking at the facts we see the deal is good for drinkers and shareholders alike.


Derek Hillen, CAIA

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