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Maciej Wojtal

lines on the record: 64
first: 2022-02-13
most recent: 2022-02-13
sittings or episodes: 1
sources: podcast

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“They are well placed to export in this region. So the whole market, when you look at Iran for those companies, you know, say, okay, 80 million people, but then many regional exporters export to the market of 500 million people. That's why they can gain enough scale and, for example, sustain through sanctions. But what is very important is the quality of people in Iran. So the education level, so tertiary education, enrollment rates are similar to Europe. Iranians have 5,000 years of written history and there is a strong sense when you speak to Iranians that they understand this and that there is this heritage, strong culture, heritage and that education has always been important. So you get very strong quality of people that you can employ and wages are lower than in Vietnam. It's as ratio of cost quality probably”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Iran is completely misunderstood because it's been under sanctions, because it's been shut down. There are not too many foreigners in Iran investing or living. So people just don't know. And Iran, so starting with the very basic facts, is a big country of 84 million people with the median age of around 30 years, with the beautiful demographic profile. And it's located in the region between Middle East and Central Asia. So it's very important because Iran benefits from its location because it is, for example, on the way of Chinese belt and road initiative, very important country between Europe and Asia. But it's also important because Iran plus all its neighbors, it's more than 500 million people. It's like Second Europe. And Iranian companies have very good connections in the region.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Comparison to China, Russia, Poland is good and is interesting because it shows you the potential for the sudden increasing prices. But there is much more to it, much more going on in the country, in the macro and on the corporate level in Iran when the country opens up.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Competitiveness was increasing, and they were making a lot of money. But consumers were hit with stable macroeconomy. Also consumers will start feeling better. So their spending power will increase, their real spending power. So what I wanted to say is that opening up of a country in case of Iran means not only the inflow of money of direct investments, of portfolio investments from outside of Iran will mean accessing foreign financing, but it will also mean profit growth for the local companies, but would also mean a massive credit impulse, a massive credit boom, because there is no leverage in the economy at the moment. Companies don't have much debt with high interest rates. There is no debt. There is no obviously hard currency that zero. Also individuals, they're not indebted. So everything will happen in the future. So you're before all of these things were starting. So that's why the...”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“No longer a problem. So there is no reason why inflation is not going back to around 10%. So when you have stable macroeconomic landscape, stable prices, interest rates will go down obviously, but also it will be possible for the local companies and local consumers to plan ahead, to plan a couple of years down the line, which will support investment spending, also lower rates will mean better access to money, to financing, and better visibility because of stability will mean that people will be more eager to make long-term investments. Iranian population lost on sanctions the biggest way, meaning that their spending power got hit the most. Manufacturers actually did pretty well because many of them are exporting. So when sanctions hit, kerosene was depreciating.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Happens when sanctions are lifted, so when the country opens up. So, first thing that we will observe is that Iran can export much more oil. And this is very important because suddenly they export 2 million barrels per day, which means anywhere between 50, maybe 80 billion dollars of additional revenue per year for the country. And this solves all the problems. This solves the problem of the budget deficit. So they don't have to print as much money as they are printing, which obviously impacts inflation. This means that their current account will look better. So Iran is a country that before the last wave of sanctions, they were running a strong surplus in trade balance in current account. And this will be the case in the future as well. So with that, the currency stabilizes when the local currency, which is Iranian real, is not depreciating anymore. The inflation, the prices stabilize. So the inflation is”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Arrange logistics. All of this is very difficult, which means that you pay much more for it. So it's additional 5% for transferring money, 2.5% for shipping, you know, a couple of percent for insurance. All this eats into their margins. And also decreases their volumes. So opening up of a country in the case of Iran will mean, for example, for Iranian exporters, volumes going higher. And at the same time, margins going higher. So profits will react very strongly to this. So this is on the company level, but also if you look at the macro level, Iran pretty much for the last 40 years has been under stronger or lighter, but always some sort of sanctions. The economy of Iran has been also not expanding as it could have because of sanctions. Inflation is higher because of sanctions. So what has happened?”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Just chain the Russia and Poland in the early 90s because of the same sanctions. The other countries just opened up to the flow of foreign capital. Iran will also open up its economy. So right now when you look at Iranian companies, you have exporters, for example, petrochemical exporter. Most profitable petrochemical companies in the world, just like in Saudi Arabia, highest margins. But if you are an Iranian exporter and want to sell your products abroad, it's difficult for you to find investors. because it's Iranian. People know there are sanctions, so they don't know whether they are allowed to buy products from you or not. So you have to entice them by offering discounts. So the selling prices that you're realizing are much lower than global prices that other companies are realizing. Then try to get paid if you're Iranian company. Banks don't really work. The connections between Iranian banks and foreign banks. Try to get your products insured.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“Or companies controlled by certain entities if they don't want to violate U.S. sanctions. So this is a big homework to do. You actually have to do due diligence on every single investment you do. We hired a Washington-based legal advisor who used to be the advisor of the National Security Council at the White House and before he was at the State Department to advise us on sanctions, to advise us on our due diligence procedures, to tell us if we can or cannot invest in particular industry or a company. So it's really a lot of work to do. Now, so these are big obstacles. That's why it's similar. That's why when these obstacles are removed, we do expect waves of foreign investors. Initially they will be coming from Europe and Asia and then to come from US, you will need to have additional sanctions, primary US sanctions removed. But actually Iran is much more than...”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“It's not only difficult to access it as in China, Russia, 30 years ago because it's difficult to open a bank account. It's difficult to get a local license. You need a special trading code for foreigners. There is much more administration around it. Right now it's just impossible to open a non-resident bank account. So you will have to become a resident, which is also not easy and not to do just to invest in the market. But also in case of Iran, you have sanctions. You have US sanctions and then sanctions, you have to understand sanctions. So you have many different levels of sanctions. I have UN sanctions, EU sanctions, US sanctions, the most broad comprehensive ones are the US sanctions. And they say that US investors cannot invest at the moment in Iran. But everyone else can. All the European and Asian investors are allowed to invest as long as they don't invest in certain sectors or certain entities.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“And it's the same in Iran. One more thing is important. Not all markets, when they open up, not all markets have well-developed capital markets. China had a stock market. Russia had a stock market. Poland had a small stock market. But there are countries out there where North Korea will open up at some point, might be interesting, but there is no capital market. So you can launch a startup or set up a bank, right, or buy a factory there, those type of opportunities, but nothing to do for a portfolio investor. So Iran is more similar to the opportunities like China, Russia, Eastern Europe, because it has a well-functioning liquid stock market with the lowest valuations in the world, which we can talk about in a moment, and all foreign investors, all the foreign money invested in the market is less than half a percent of the market cap because it's really difficult to access it.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“An inflow of foreign capital that just lifted the market big time. So Iran is similar in many ways. And yes, so what you refer to, this Warren Buffett quote, actually makes sense in those markets, right? Because you just want to be long. You just want to be long the stock market. Your investment strategy doesn't have to be complicated. Probably shouldn't be complicated. You don't have to go into, I don't know, derivatives. Well, at those stages, in those markets, derivatives markets are probably not well developed anyway. So you just have to be long, right? Long beta, and that's it. And you'll be happy. What he also said, I think it was part of the same quote, that the execution of this investment strategy is important. And those markets, execution means actually getting this exposure, being able to invest early before all this happens, before all the other investors access the market.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“It was similar. I mean, the index in dollar terms in, I think it was 1994 went up around 10 times, again, in less than two years. Poland was even more striking because the stock market was launched around 1992, 1993 for the first two years, nothing really happened. The stocks were trading at three times earnings, no one was investing. There were no foreigners. Then foreign investors saw, okay, it's actually a stable enough economy after transitioning from socialism to market economy. It's stable enough. And they started investing and the market went up in dollar terms almost 25 times, 25x in less than two years. Then it crashed, obviously. Then it went up again. But at the beginning, it was just moving sideways at very low valuations. And then there was this.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT
“So market opening up can mean obviously many different things, and it will be different. But if we look at the last 20 years of history and those main markets, the main thing it meant is that there was an inflow of foreign capital and usually not enough liquidity in the stock market to absorb it, which meant that the local market was just moving rapidly higher in a very short period of time. So, for example, in the early 90s, China opened up also not fully partially and the index in dollar terms went up around 12 times in less than two years. While it's interesting to note that at that time, China was actually still under sanctions after Tiananmen Square. So it wasn't very easy and it wasn't very straightforward still. When it opened up and there were no foreign investors involved, when they came, the market just skyrocketed with Russia.”
2022-02-13 · We Study Billionaires · TIP422: Frontier Market Investing w/ Maciej Wojtal · IDENTIFIED FROM THE TRANSCRIPT