By Carolyn Cohn
LONDON Feb 1 From phone bills in Lagos to
bulldozers in Beijing, analysts are looking creatively at ways
to measure the strength of emerging market economies where
official data sometimes comes up short.
How much Guinness are Nigerians drinking? How full are
hotels in the Gulf? What about enrolment in international
All are methods being used to track the ups and downs of
economies where timeliness, transparency and accuracy do not
always meet develop market standards.
The explosion of interest in emerging markets - Lipper data
shows $90 billion in fund inflows last year - has drawn in many
investors who are less familiar with analysing risky assets and
Quarterly economic growth data, for example, is the most
comprehensive and complete set of statistics on any developed
economy's economic health.
Yet the availability of even this most-basic economic
speedometer is fraught with caveats when it comes to emerging
It is released too late to be of much use in the case of
many African countries, or not at all in many Middle Eastern
countries. In China, meanwhile, this key release arrives
unsettlingly early for some.
So some analysts have started looking at other data or even
creating their own datasets to assess how investible such
"In emerging markets it's more difficult (to get good data)
than in developed markets, because it's expensive to run a good
statistics office - it does not tend to be a priority," said
Graham Stock, strategist at frontier fund Insparo, adding: "You
have to use proxies."
BOOZE AND BULLDOZERS
Proxies that Stock and others look at to judge the strength
of the growing consumer class in Africa - cited frequently by
investors as one of the huge attractions of the continent -
include quarterly consumption data from local breweries such as
Guinness Nigeria and Zimbabwe's Delta.
"We get more thorough data through going to the companies
themselves - not as broad a coverage, but much more timely,"
Investment in financial services stocks in Nigeria were
boosted by an examination of mobile phone subscriptions.
The monthly data is released within a few weeks where
quarterly gross domestic product data takes a few months.
It showed, for example, a 3 percent rise in active mobile
phone subscriptions between September and November Nov 2012 to
110 million, in a country with a population of 170 million.
Based on that rise, which brings the December 2011-November
2012 gain in subscriptions to 16 percent, investors expect bank
accounts - currently estimated at 20 million - to follow.
As a result, they have bought Nigerian banks, a good call in
recent months. Zenith Bank shares, for example,
jumped 20 percent in the fourth quarter.
Analysts will have to wait several more weeks for the formal
fourth quarter GDP data.
By contrast, analysts point to the speed with which China
releases GDP - only a couple of weeks after the end of a quarter
- as a sign it may not be accurate, encouraging them to look at
other ways to replicate aspects of the data.
Mark Zandi, chief economist of Moody's Analytics, watches
data from a firm which checks satellite monitors on Chinese
construction equipment to see if the machinery is in use.
"That's been an area of concern, whether property markets
are becoming overheated," Zandi said. "If they stop growing,
that could be a problem for Chinese growth."
In the Gulf, investors may look at anything from hotel
occupancy rates, to work visa approvals, to enrolment rates at
international schools to assess the level of economic activity.
SURFING AND SUPERMARKETS
Not content with looking at these kinds of things, some
investors have developed their own models or turned to those of
academics in the search for data that more accurately measures
State Street incorporated data on online shopping prices
from U.S. company PriceStats into its own research in 2011,
covering many developed markets as well as emerging markets such
as Russia, South Africa, and Latin American countries.
The regularly updated data acts effectively as a leading
indicator for official inflation data, according to a State
Street study based on U.S. inflation.
In China, the surveys of food and supermarket prices show
price deflation for most of December and January, in contrast to
consensus expectations for inflation to quicken in China this
BlackRock, the world's largest fund manager, started its own
sovereign risk indices in 2011 across major and emerging
markets, amid concern about risk in many developed sovereigns.
"Our backtesting has shown that our index tends to highlight
deteriorating fundamentals before the ratings agencies," said
Thomas Christiansen, an investment strategist in the BlackRock