March 24, 2022

Stock research in authoritarian regimes stopped

Stock research in authoritarian regimes stopped

We have discontinued equity research for companies in the following non-democratic countries: Bahrain, Bangladesh, China, Colombia, Egypt, Hong Kong, Kazakhstan, Kuwait, Lebanon, Mexico, Nigeria, Oman, Qatar, Russia, Turkey, United Arab Emirates and Vietnam. We did this for several reasons:

  1. There is significant legal uncertainty in dictatorships, which makes investing in these jurisdictions too risky for outside investors. The interconnectedness of politics and business in dictatorships, the "Filz" as we say in Switzerland, means that the property rights of shareholders in these societies are not sufficiently protected.
  2. We want to make it easy and safe for investors. Retirement savings should be invested with little effort and wisely. Investing in companies in unfree societies is neither easy nor safe. Therefore, it makes little sense for these stocks to be analysed for individual investors.
  3. In dictatorships, one cannot rely on the published facts, because these are usually politically controlled, which excessively compromises the data basis for the use of the Obermatt method. Incorrect data also has an impact on stocks in democracies. Deleting possibly falsified data can therefore additionally improve the quality of the Obermatt equity research.

But there is an even more central, moral reason: dictatorships violate inalienable personal rights such as the right to physical integrity and freedom of expression, which are indispensable prerequisites for living together among responsible people; in every society. It makes no sense to support systems of power that put people and autonomous societies at risk. Every investment in companies and products of dictatorships is a support of these systems. Out of interest in our own freedom and human dignity, we must renounce consumption and returns from doubtful sources.

Today, Obermatt evaluates nearly 9000 stocks in 54 countries. Research is available on all equities in Europe, India, Australia, New Zealand, the USA and Canada as well as selected countries in Asia (Malaysia, Singapore, Taiwan and Japan, South Korea, Thailand), Africa (Israel, Morocco, South Africa) and South America (Argentina, Brazil and Chile) and tax havens (Cayman Islands, British Virgin Islands, Netherlands Antilles).

The decision to exclude stocks in dictatorships has motivated a good dozen of the 4,300 Obermatt users to cancel their free subscription; just under half a percent. This is a welcome indication that most Obermatt investors prefer safe markets, which is also the declared objective of the Obermatt offering.

We buy the stocks we discuss and openly publish the returns of our portfolio. That's how much we believe in our stock research. Subscribe to the top 10 stocks for 100 markets conveniently by e-mail.

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