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Lunch with BS: Ruchir Sharma

Uncertainly principles

Kanika Datta  |  New Delhi 

Ruchir Sharma

When it comes to emerging markets, you can’t take anything for granted, says the author of a book on tomorrow’s possible champions

It is difficult to associate Ruchir Sharma with his first book, .In sharp contrast to the dramatic title and sure-footed prose of the book and his reputation for being formidably well networked, Sharma is a diffident, almost awkward, interviewee.

Since he’s widely travelled – his book is, as he describes it, “an economic travelogue” – and has been in the thick of the roller-coaster world of for almost two decades, I’m expecting plain tales from exotic locations. Instead, almost underlining one of the central points of Breakout Nations, he hesitates to offer strong judgements on anything. It’s almost as though he’s used to listening than talking, writes Kanika Datta.

Sharma has chosen China Kitchen in the Hyatt Regency, a personal favourite. He confirms this by ordering without referring to the menu. We opt for two starters: beans in sesame and mustard sauce and a chilli vegetable. I am gallantly invited to decide whether the latter should be spicy or normal. Spicy, I say rashly, which turns out to be a good bad decision. For the main course, Sharma, a vegetarian (“by choice”), orders a vegetable claypot and I lamb stir-fried in sesame seeds with fried rice on the side.

Sharma profiles over two dozen in and I ask him how he decided which country is good or bad for investment. He has drawn up ten rules, but admits that the choice is subjective. “One of the obvious questions I am asked is, which are your In a sense, that’s not the point of the book. It’s about how success is not permanent.” The beans arrive and are, at any rate, a breakout dish and I compliment Sharma on his choice before talking about his book. He has been a sharp critic of the grouping devised by Goldman Sachs in 2001 (initially Brazil, Russia, India and China; South Africa was added later) as the future “breakout nations”.

Iget a more emphatic reply this time. “The point about BRIC was that it was a great marketing concept —but that’s all it was. Every single emerging market did very well in the last decade —and BRIC represented the largest so they got the maximum spotlight. But I’m not sure that that’s going to continue for the next decade.” But wasn’t his book BRICS-plus? “Not really,” he counters, “What I have tried to say is, one, which are countries likely to beat expectations in terms of where the consensus is currently is, and, two, how do they do among their own income class. So these are countries that beat expectations and do better than other countries in their peer group.” The chilli vegetables are served and they, too, are a breakout choice in a different sense —so spicy that I break out in perspiration (my guest, I note, is quite unaffected) but too delicious to not take seconds and thirds. I sniffle my way through them and comment on the modest CV recorded on the book flap —the highlight is his current designation as head of Emerging Market Equities and Global Macro at

Interestingly, he did not get to Wall Street via the foreign B-school/university route. School education was spread over Mumbai, Delhi, and Singapore, following the inevitably peripatetic career of a father who was in the navy and, for a while, in diplomatic service. College was Delhi’s Shri Ram College of Commerce.

His plan was to go abroad for a PhD in economics and, while he was waiting, he joined a securities trading company and also started writing, first for The Observer and later for The Economic Times .This was the early reform years and Sharma’s choice of subject was hardly in vogue. “I wanted to write on global markets for some reason. Everyone said do it because, well, who cares! So, I started a column called Forex Watch.” That attracted the attention of Morgan Stanley, then making its entry into newly liberalised India. “I guess Morgan Stanley liked what I used to write and they asked me whether I want to study or make money. I got an unbelievable offer in those days, back in 1996.” After a stint in Mumbai, he went to New York in 2002. Though he’s been there for a decade, he calls it his “base,” not home. “That’s still India,” he says, where his “heart belongs” and he makes it a point to be here once a quarter. Later. Iask him which breakout nation he’d like to live in and the answer is unhesitating: “No question, India. In most emerging markets, you want to finish your work and get out. But two countries I would enjoy spending a weekend would be Turkey and South Africa.” His big takeaway from global investing business is getting used to uncertainty.

“I have seen too many cycles. Emerging markets had been hot, exotic but lost their sheen in 1994. So I saw the bear market at first hand.” He was handling Asian markets in 1997-98, just as the financial crisis hit. “It was baptism by fire because I would go to these markets and see big brokerages and offices get shut down.” As he recalls, the global financial crisis of 2008 did not affect him as much as the 1997-98 one. “I suppose that was because it was about us,” he muses. “It was the time when the emerging markets were the bad boys, from Russia to Thailand to Mexico, and I was much younger then and to see so much bloodletting at that stage was much harder than in 2008.” Although, I point out, the bounceback was quite quick. “Emerging markets never really got their lustre back till 2003,” he replies, “because the bounceback in 1990-2000 was on the back of the global tech boom. In emerging markets, the sentiment was so beaten that some of my colleagues were looking to reposition them as eee-merging markets —no one was interested in investing so you had to hitch on the US and tech boom.” Which is the best call he’s made? Ironically, he answered, Russia, which was the best performing emerging market till 2008. What’s the buzz on India now? He laughs. “The bloom is clearly off the rose. Investors have become indifferent. I’ve mapped it. When the boom started in 2005, every man and his dog would raise money for India. By 2007, even the man was not required, just the dog would do. Today you’re back to the situation where it takes effort to sell India.” Travel absorbs about a week of his time each month, so what did he do in his spare time? The answer was partly surprising. One passion is politics and he and a bunch of 20 friends (mostly journalists) would travel into the interiors of India during elections as informal observers — he’s done 19 such trips to various Indian states.

The other passion is sprinting, and it’s a serious one. Last year, he represented India in the World Masters, a track and field event for men and women over 35, in Sacramento, participating in both the 100-metre and 400-metre events.

How did he find the time to train, I ask incredulously. He has trainers both in India (a former coach of the national team) and in New York (a 1996 Olympic bronze medallist) and tries to train every evening six days a week between 6.30 and 8 as matter of discipline.

Considering he had partaken of a goodly meal, quite at odds with his spare frame, I ask him about diet restrictions. He says he runs for relaxation, and refuses to become a bore about it. “I don’t want to change my life and fuss about not eating gluten and this or that, so I eat what Ilike and enjoy the competition.” I tell him I had stopped watching international athletics because I thought much of it is drug assisted. He agrees, and recalls how he found needles strewn all around Nehru Stadium when he practised there.

Bill paid, we head out to the lobby and he’s grumbling about the pressures his publishers put on him to generate publicity for his book. Judging from the rip currents of coverage that washed over the media the weekend after this lunch, they have nothing to complain about. 

First Published: Tue, May 01 2012. 00:54 IST