Bland assumptions made about investing can be lethal. Many get very excited about generalist comments that often cover a subject with all the individuality of a magnolia matt emulsion. So whether it be commodities or emerging markets, the broad descriptions are usually an excuse for intellectual laziness and a reflection of a lack of rigour in thinking and evaluation. Our industry sometimes loves to be lazy and just label groups of investments as being apparently the same as one another.

Obviously one such broad brush stroke has been the ‘emerging markets’ which for some has almost included anything beyond Calais. This is a gloriously patronising term that evokes the picture of loincloth clad locals warily peeking out of the jungle brush, and is used to cover everything from economic leviathans like China, to even include some of the Eastern European members of the European Union – neither of which are blessed with either acres of tropical rain forest or climates suitable for loincloths.
Of course, nothing could be further from the truth and even the acronym of BRIC, used to describe Brazil, Russia, India and China, manages to include nations often with astonishingly little in common other than their size. Russia with a falling population and a dependence on producing commodities, China with a dependence on importing commodities with a skewed population demographic of one child one family (although of course this is now ‘adapting’) and a constricting political oligarchy, India also with a lack of commodities and with a delightfully inefficient infrastructure also with a twisted population structure (with a ratio of around 910 girls for every 1000 boys) but the largest democracy in the world, and finally Brazil a nation with a growing population, a breadth of commodities and an aptitude for football.

Yes they have certain elements in common but from their own perspective they would have more differentiators from their fellow acronym’s constituents than common denominators.

So take one such ‘emerging’ economy – Hungary. Like some others in the Eastern European region they suffered the tribulations of last year but have survived successfully to show some significant advances in equities, bonds and even their currency.

Hungary was one of the first to ask for help, with a $28bn EU and IMF support package. Despite their reluctance to accept the stringent demands for cuts, actions were taken and despite one or two self inflicted wounds (such as one official comparing their fiscal situation to that of Greece) attitudes towards the country finally started to change.

Firstly they had the benefit of being able to devalue the Forint against the Dollar to assist with their competitiveness, and then with their proximity to the German economy sourcing orders from Eastern Europe, the nation found the sentiment towards it beginning to alter. However, the problems have not gone away, with bank downgrades still being announced but they are at least being seen to be managing the situation and not just being tossed about like a fishing smack in an Aegean storm. Eastern European nations don’t seem to have suffered the same fate as the PIGS.

Then let’s compare this situation with Brazil. The country under its previous president, Luiz Inácio Lula da Silva, the 35th President of Brazil, saw a remarkable development as he steered the economy to benefit from the global commodities boom. Now some of this was lucky timing but also down to prudent political management. However, his successor Dilma Rousseff now finds herself with not just a booming economy but potentially an overheating one.

Property prices have rocketed and even the ‘favelas’ have seen prices sometimes double or even treble. The Brazilian Real has risen strongly against the $ making manufacturing far less competitive, with even Siemens announcing a transfer of its some of it production away from Brazil – and even some going to another low cost production centre – Hull! With rising interest rates to combat inflation and nervousness over commodity prices, the surety of foot of a couple of years ago has become a lot more nervous.

And finally ...............Time to man the barricades. You would think they would have learnt by now, but the Danes, a normally placid nation having given up rape and pillage some centuries ago, seem to have struck a seam of angst recently to wind up others around the globe. Firstly the cartoons of the Prophet Mohammed which caused riots in certain areas and now a potential ban on the obviously lethal Marmite along with other possible toxic mixtures as Ovaltine and Horlicks.

From their usual production of remarkably tasteless lager (mind you that applies to most lager) to watery bacon rashers, the Danish have little to upset most of us, and provide us with little riveting topics of conversation other than the obviously fascinating origins of the Schleswig-Holstein Question. Now however, it may be time to arm ourselves with Lego bricks and be prepared to demonstrate outside the Danish embassy – and maybe even build an attractive multicolored wall around it.
This now though has taken on a broader international dimension, with uproar in nations like New Zealand, Australia (with its Vegemite), and South Africa. One quote from the Guardian sums up much of the attitude - Lyndsay Jensen, a Yorkshire-born graphic designer in Copenhagen, told The Guardian she would defy the ban and import supplies from Britain. "If they want to take my Marmite off me, they'll have to wrench it from my cold dead hands," she said.

Personally I blame the diminutive Sandi Toksvig as she potentially could use a Marmite jar as a home. (I’m joking - actually Sandi is an Anglo-Danish national treasure.)

Have a good week.

Justin A. Urquhart Stewart Director Seven Investment Management Limited