What Does the Launch of FTtilt Tell Us About the Future of Emerging Markets?

• Posted by zerobeta
• on January 12th, 2011

Yesterday, FTtilt launced.  FTtilt is a new, partially pay-walled site from the Financial Times focused squarely on the Emerging Markets.  As someone in Financial media, I’m interested to see where it goes and with Stacy-Marie Ishmael from FTAlphaville behind it, I’m fairly confident it will be a success. What I think is more interesting, however, is what it says about the Emerging Markets.

There are some who would regard an event like this as a contrary, bearish indicator.  Yesterday, I poked fun at this on StockTwits, as it happened to coincide with some enormous volatility (and rioting) in the Dhaka Stock Exchange in Bangladesh.   Kidding aside, I think the launch of FTtilt is quite bullish for Emerging Markets in general.

It’s my belief that capital flows towards information.  Despite their abundant resources and cheap capital, historically Emerging Markets have commanded an enormous valuation discount due to a lack of information.   Lack of information includes future political instability, economic uncertainty, financial infrastructure instability, as well as a general lack of media coverage.  Media coverage is important as most investors don’t live in these markets, and would be more willing to invest if there was media covering the events that affected the markets.

The investment in media and information infrastructure in emerging markets is bullish for the entire market.  We saw this as the digital age swept through the US markets.  While standard investor media was around, the internet brought new dimensions of market information to the average investor and increased his/her participation.  While it did not end so well for this investor,it no doubt resulted in a very bullish trend for quite some time.

The launch FTtilt represents a significant investment in such infrastructure.  It’s a major investment by a mainstream publication which no doubt will spur competitive reactions from others, potentially resulting in an upgrade of the entire financial media infrastructure.  Markets that were previously uncovered will begin to get covered, capital will flow to this information.  Markets will benefit from this capital flow, and there will be more investment in financial media/information infrastructure.

Feedback loop, repeat.

While obviously the “contrarians” could end up being right, and short term they may.  Long term, however, I’m quite bullish on the intersection of information and markets, and its economic effects and this is a significant intersection in some significant markets.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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