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    Indra Nooyi on leadership for a new era
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    According to David M. Rubenstein, Co-Founder & Co-Chairman of private investment firm The Carlyle Group, two overriding challenges will determine the state of economies over the next 18 months.

    The first: Will the world move beyond the COVID pandemic, or will a new variant upset the progress that has been made?

    The second: Will the era of artificially low interest rates and quantitative easing soon be coming to an end?

    While the exact outcomes of these two challenges can’t be known, they will both have an effect on financing.

    Here, Rubenstein maps out his “3 Point Perspective” on what lies ahead for investors as part of Barclays Asia Forum 2021, our flagship client event series in Asia Pacific.

    The number one in a cyan blue triangle

    Less capital flowing into emerging markets

    During the COVID-19 pandemic, resources were often pulled back into developed markets causing many emerging markets to struggle.

    While investment returns in the emerging markets are roughly comparable with those in developed markets, they carry much greater risk. Consequently, some investors will opt for less risk for the same rates of return. This is the most serious challenge facing emerging markets today.

    Global coronavirus cases spread rapidly

    Source: Institute of International Finance

    But opportunities remain because prices are somewhat lower than they otherwise would be. And many of the markets in Latin America, Africa, the Middle East and Southeast Asia have high growth rates and young populations, which may bode well for future performance.

    Emerging markets deserve more attention from the West, but for the time being, less capital is going into those markets. That said, investors who buy into emerging market assets must have a willingness to hold them for the long term.

    The number 2 in a cyan blue triangle

    China still attractive, but be wary

    Many people thought America’s relationship with China would improve under the current US administration, but the relationship has remained strained. The US has kept a relatively tough line on Hong Kong, the Uyghurs and Taiwan, and China is unlikely to change its stance on these issues either.

    We will see some tough rhetoric from both sides in the near future, and it will be some time before the two countries come together.

    And yet, China is still a very attractive place to invest. The country has great opportunities even though it is more fully valued than it was 10 years ago. China is a gigantic economy. Measured by purchase price parity, it is the biggest economy in the world and in 10 years, it will probably be the largest when measured by nominal GDP. Yet is it important that investors pay attention to China’s recent regulatory policies, which are affecting certain companies and sectors.

    Effect of China’s ban on importing waste plastic

    Source: The World Bank

     

    The number 3 in a cyan blue triangle

    Private equity as an asset class

    The phrase “private equity” didn't exist 35 years ago. These days in the US, it tends to mean all kinds of private investments.

    Over the past 30 years, the different types of private investments have increased. Where it was once buyout or venture capital, now you have seed capital, growth capital and a spectrum in between.

    Alternatives are making up 20 to 30% of some portfolios, if not more. Some of the large college endowments have been pouring money into alternative investments and seeing impressive results largely due to venture capital investments.

    With success like that, expect to see more and more investors joining in. Family offices, sovereign wealth funds and others are also directly investing in this area.

    Global corporate ESG bond issuance reached a record high in 2020

    Source: Preqin

    As the private equity industry continues to grow, recent outsized returns may not be sustainable. As investors put more and more money in, returns will inevitably come down as the law of size makes it impossible to have that much money outperform.

    That said, the private equity world is still an attractive place in which to invest because the returns generally continue to outperform public market returns.

    Important content disclosures

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    About David M. Rubenstein

    David M. Rubenstein is Co-Founder and Co-Chairman of The Carlyle Group, one of the world’s largest and most successful private investment firms. Established in 1987, Carlyle now manages $276 billion from 27 offices around the world.

     

    Read more about David M. Rubenstein

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    About David M. Rubenstein

    David M. Rubenstein is Co-Founder and Co-Chairman of The Carlyle Group, one of the world’s largest and most successful private investment firms. Established in 1987, Carlyle now manages $276 billion from 27 offices around the world.

    Mr. Rubenstein is Chairman of the Boards of the John F. Kennedy Center for the Performing Arts, the Council on Foreign Relations, the National Gallery of Art, and the Economic Club of Washington; a Fellow of the Harvard Corporation; a Trustee of the University of Chicago, Memorial Sloan-Kettering Cancer Center, Johns Hopkins Medicine, the Institute for Advanced Study, the National Constitution Center, the Brookings Institution, and the World Economic Forum; and a Director of the Lincoln Center for the Performing Arts and the American Academy of Arts and Sciences.

    Mr. Rubenstein is a member of the American Philosophical Society, Business Council, Harvard Global Advisory Council (Chairman), Madison Council of the Library of Congress (Chairman), Board of Dean’s Advisors of the Business School at Harvard, Advisory Board of the School of Economics and Management at Tsinghua University (former Chairman), and Board of the World Economic Forum Global Shapers Community. 

    Mr. Rubenstein has served as Chairman of the Board of Trustees of Duke University and the Smithsonian Institution, and Co-Chairman of the Board of the Brookings Institution.

    Mr. Rubenstein is an original signer of The Giving Pledge, a significant donor to all of the above-mentioned non-profit organizations, and a recipient of the Carnegie Medal of Philanthropy, and the MoMA’s David Rockefeller Award, among other philanthropic awards.

    Mr. Rubenstein is a leader in the area of Patriotic Philanthropy, having made transformative gifts for the restoration or repair of the Washington Monument, Lincoln Memorial, Jefferson Memorial, Monticello, Montpelier, Mount Vernon, Arlington House, Iwo Jima Memorial, the Kennedy Center, the Smithsonian, the National Archives, the National Zoo, the Library of Congress, and the National Museum of African American History and Culture. Mr. Rubenstein has also provided to the U.S. government long-term loans of his rare copies of the Magna Carta, the Declaration of Independence, the U.S. Constitution, the Bill of Rights, the Emancipation Proclamation, the 13th Amendment, the first map of the U.S. (Abel Buell map), and the first book printed in the U.S. (Bay Psalm Book).

    Mr. Rubenstein is the host of The David Rubenstein Show: Peer-to-Peer Conversations on Bloomberg TV and PBS and Bloomberg Wealth with David Rubenstein on Bloomberg TV; and the author of The American Story: Conversations with Master Historians, a book published by Simon & Schuster in October 2019, How to Lead: Wisdom from the World's Greatest CEOs, Founders, and Game Changers, a book published by Simon & Schuster in September 2020, and The American Experiment: Dialogues on a Dream, a book published by Simon & Schuster in September 2021.

    Mr. Rubenstein, a native of Baltimore, is a 1970 magna cum laude graduate of Duke University, where he was elected Phi Beta Kappa. Mr. Rubenstein graduated in 1973 from the University of Chicago Law School, where he was an editor of the Law Review.

    From 1973-1975, Mr. Rubenstein practiced law in New York with Paul, Weiss, Rifkind, Wharton & Garrison. From 1975-1976, he served as Chief Counsel to the U.S. Senate Judiciary Committee’s Subcommittee on Constitutional Amendments. From 1977-1981, during the Carter Administration, Mr. Rubenstein was Deputy Assistant to the President for Domestic Policy. After his White House service and before co-founding Carlyle, Mr. Rubenstein practiced law in Washington with Shaw, Pittman, Potts & Trowbridge (now Pillsbury Winthrop Shaw Pittman).

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