“Eoin mentioned recently in relation to South Africa

"If history is any guide, foreign investors are not overly worried about corruption provided it does not lead to inflation or greatly impede economic growth"

“Doesn't this fly in the face of your comments on "good governance" in the general sense?

“Perhaps I am confused here; but when you speak about governance what actually are you referring to, when you say "governance is everything".

“Can you list the key points of good governance to watch for in a country so I am clear what you mean ....”

“Thank you so much for your good commentary...very enjoyable to read and more importantly to learn from every day”

Eoin Treacy's view Thank you for this question which others may also find of interest. When we speak of governance it is important to accept that it is not a static consideration. The global investment community is constantly evaluating new opportunities and how they compare to their present positions. Attitudes towards governance are equally fluid. The biggest question is if the situation is getting worse or getting better.

When investing in any country we need to have a view on a number of factors:

The reliability of data is an important consideration. Simply speaking, are potential investment opportunities being accurately represented by those seeking to sell? This is equally true of a company's credit or shares, mining assets, sovereign bonds or economic data. While some countries tend to be put under a greater burden of proof than others, mostly because of historical considerations, this question is equally applicable in all jurisdictions.

The rule of law. Once an investment has been made do you have title to the asset? Will contracts be upheld? What recourse do we have to the courts and how independent are they? While mature democracies generally have the best reputation for respecting property and minority shareholder rights as well as upholding contracts, they rely on the independence of the judiciary to ensure these pillars of governance are upheld. Democracy in itself is not a precondition.

Economic governance. There are times when deficit spending can be justified either because it is used to bridge a temporary soft patch in revenue generation or to invest in a capital project which will provide significant long-term benefit. However, while using deficit spending to increase the size of the welfare state, increase the public payroll or prop up failed industries can have beneficial effect in the short-term, they ultimately lead to much greater problems when funding runs out. Governments are then left with little choice than to devalue the currency and attempt to inflate their way out of the problem. Therefore, investors treat countries with a strong anti- inflationary bias favourably. A commitment to balance the budget as a serious medium-term ambition acts as a confidence building measure. This is a true of the Eurozone today as it was of Brazil more than a decade ago and will be of the USA in future. .

Corruption is always and everywhere abhorrent. It also exists in every single country. Where it becomes a problem is when it poses a threat to the reliability of data collection, the independence of the judiciary or property rights.

When we look at any country as an investment destination, we consider each of these qualitative values and ascertain whether they are getting better or worse. It is for this reason they we dispensed with the emerging versus developed appellations a number of years ago and now refer to progressing and regressing markets.