THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020

Harvard University
Extension School

ECON E-1925
Emerging Markets: Investment Theories and Practice
Course Syllabus – Fall 2020

Course Logistics:

* Day and Time: Online Tuesdays 5:30PM - 7:30PM EST (GMT -4 & -5), starting Sept. 1, 2020
* Weekly Recorded Lectures: Will be posted
* Course site: TBD, details to follow.
* Web conference link will be provided by the school.

Instructors:

Peter Marber Email: pmarber@fas.harvard.edu

Luis Miguel Echeverri, Teaching Assistant Email: echeverri@fas.harvard.edu

PETER MARBER, PHD is a pioneering global investor, professor, and writer focused on globalization
and financial markets. Since 1987, Marber has professionally managed billions of dollars for many of
the world’s largest financial groups. An award-winning investor, Marber is a Chief Investment Officer
for Emerging Markets and founding member at Aperture Investors in New York. He previously headed
emerging markets for Loomis, Sayles & Co. and served as Chief Business Strategist at HSBC Global
Asset Management. Before that, he was founding partner and chief strategist for The Atlantic Funds,
which was acquired by HSBC in 2005. He started his career as an emerging markets trader at UBS, and
was president of the emerging markets subsidiaries of Wasserstein, Perella & Company.

Marber has taught at Harvard since 2014 and received the J. Fussa Award for Distinguished Teaching in
2017. He has previously taught at Johns Hopkins Carey Business School, Columbia University, and
NYU’s Center for Global Affairs. He has authored more than 100 columns and provides commentary to
CNN, CNBC, the Financial Times, Quartz, Bloomberg, and the Wall Street Journal. He serves and/or
has served on boards for institutions including the Emerging Markets Trade Association, New America
Foundation, St. John’s College, World Policy Institute, and Columbia’s School of International & Public
Affairs. Marber’s first book, From Third World to World Class: The Future of Emerging Markets in the
Global Economy, was named a top ten business book in 1998 and was called future reference reading for
“The 24/7 Global Marketplace” by Wired magazine in 2001. In addition, he has published five other
books on global finance, investing, human capital, and higher education. His latest book on geopolitical
risk will be published in late 2020. Dr. Marber earned his bachelor’s degree from Johns Hopkins,
________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 1 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020
master’s from Columbia, and doctorate from the University of Cambridge.

LUIS M. ECHEVERRI has over 15 years of corporate experience. He spent the first part of his career
in the insurance industry, transitioning later into the renewable energy and power sector. He currently
works at Enel, Italian multinational in the energy sector, where he holds the position of Sr. Director of
Insurance. In this role, he leads the insurance unit and risk management of the Enel Group businesses in
North America, including renewable energy plants across the United States and Canada.

Over his career Echeverri has accumulated hands-on experience in North America and Latin America
settings, as well as in start-up, corporate, multinational, non-for-profit, academic, and board settings. He
earned his bachelor’s degree in Economics and International Business from ICESI University (Cali,
Colombia) and his master’s degree in Management from Harvard University. He was born and raised in
Colombia and is bilingual. Luis has been a Teaching Fellow at Harvard since January 2014, and also
works with Hedge Funds M2784 and Strategic Management E5000 graduate courses.

About the Course

Course Format

For information about system requirements and how to log in - please see the detailed
instructions at the end of this document.

PLEASE NOTE THIS IS AN ONLINE COURSE. Students are expected to attend each weekly online
session on Tuesdays from 5:30-7:30pm EST.
--------------------

Course Description and Overview

Globalization is not an academic theory; it is a reality that affects all of our lives. From the foods we eat
to the goods we buy, the ubiquity of developing countries from Latin America, Asia, Africa, the Middle
East and former Soviet Union - those frequently referred to as Emerging Markets - intensifies daily. Yet
beyond the well-documented commercial and cultural impacts of globalization, there are strong but less
visible trends towards greater global financial and investment integration.

What makes emerging financial markets different from those in the US, West Europe, or Japan? What
are the benefits of adding these markets to traditional investment portfolios? How do government
policies shape these markets? Why invest in certain countries versus others? Within a country, which
asset class should we invest in? How do hedge funds approach these markets vs. traditional investors?
How has Covid-19 altered the trajectory of these markets? From the practical perspective of a U.S.
institutional investor, this course tries to help answer these questions. Through recorded class lectures,
video interviews, readings, problem sets, guest speakers, and live online sessions students should
develop greater abilities to analyze global macro trends and country fundamentals, master portfolio
construction concepts, and implement practical investment strategies.

Over the semester, the course is broken evenly into four broad areas: credit investments, currency
investments, equity investments, and portfolio construction. The class uses a matrix approach for
understanding investment options in each country, and how to evaluate their risk and return potential.

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 2 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020

To relate concepts covered in the lectures and readings, the class will track a live diversified investment
portfolio throughout the semester and analyze current events and price action. This is living case study,
and students will break into 8 working groups, each responsible for analyzing a designated portion of the
portfolio. This portfolio will also be the basis of a group project due at the end of the semester. The
ultimate goal of the course is to develop an understanding of how global, regional, local, and company-
specific happenings impact emerging markets asset prices.

The course requires a basic knowledge of finance and will require modest competency in Excel and/or a
financial calculator. Prior classes or work experience in finance would also be useful. Should you have
concerns about your background, please contact one of the instructors before the class begins.

Course Materials

This course requires students to work continually throughout the semester and entails a modest mix
of weekly lectures, reading, videos, calculations, writing, and discussion. The readings vary each
week – sometimes heavy, sometimes light. Most of the readings are available in PDF form.
To keep the class as fresh as possible, the modest reading list is supplemented by current Wall
Street research, all of which will be posted on the course. Video is available online, and
inexpensive used copies of required books can be purchased online. They also may be read on
GoogleBooks. Student/teams may be requested to make mini-presentations regarding specific
readings (with advanced notice). Please watch The Commanding Heights (available on
YouTube) before class begins. Several additional background videos will be posted for those
with limited background in finance and emerging markets; they should also be watched before
the class begins.

Required Materials:

Evestment (2012). Investment Statistics Guide (PDF supplied)

Marber, P. (1999) From Third World to World Class: The Future of Emerging Markets in the
Global Economy
Mishkin, F. (2009) The Next Great Globalization: How Disadvantaged Nations Can Harness
their Financial Systems to Get Rich
Yergin, D. & Stanislaw, J. The Commanding Heights: The Battle for the World Economy (PBS
video series)

Grading

A student’s final grade in this course will be based on the following weighting:

8% Class Participation
42% 6 Online Quizzes (7% each)
10% Group Presentation
40% Group Report

Grades reflect the quality of a student’s work submitted throughout the term according to the Harvard
Extension School’s grading standards (http://www.extension.harvard.edu/exams-grades-
policies/grades)
________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 3 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020

Course Outline and Schedule

Planned Classes (subject to change)

Due before start of class:

• Student Financial Knowledge Survey (Link will be sent by instructors)
• Watch Intro Lecture Video (in Lecture Videos folder on Canvas)
• Watch Commanding Heights videos (available online)
• Watch Background Videos (in Background Videos folder on Canvas)
• Read Marber, P. (2005). “Globalization and its Contents.” World Policy Review (In Intro folder)
• Read Marber, P. (2018). “Rethinking emerging markets.” Investments & Wealth Monitor (in
Intro folder)
All assigned readings and videos below should be complete before the weekly online session:

MODULE 1 (September 1): Introduction

- Globalization and Its Underpinnings
- Why Invest in Emerging Markets?
- Course Outline and Requirements
- Introduction to the Portfolio

Required Materials:
Lecture 1 video
Wilson & Purushothaman, (2003). “Dreaming with BRICS: The Path to 2050.” Goldman Sachs Global
Economics Paper 99 (PDF supplied)

MODULE 2 (September 8): The Origins of "Emerging" Markets

- LDC Debt Crisis/Restructurings/Brady Plan
- Birth of sovereign debt markets
- Sovereign yield curve build-out, credit analysis, basic bond math
- Risk layers and premia concepts

Required Materials:
Lecture 2 video
Marber, Chapters 1-4
Bank of America (2020). GEMs Emerging Markets Debt Primer, (PDF supplied)
KBRA podcast, “EMERGING MARKET CREDIT CRISIS—THIS TIME IS DIFFERENT 7.30.20, at
https://share.transistor.fm/s/6a2175de?vgo_ee=yq0j52TRloMT0egR82zFVoM4iRdAzgW3NiYJ3TrHnP
g%3D

MODULE 3 (September 15): Hard Currency Credit

- Brady Plan: Naranja case study
- Restructuring math/spreadsheets
- QUIZ 1

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 4 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020
Required Materials:
Lecture 3 video
S&P Ratings Direct (2018) Benin (PDF supplied)
Moody’s Investor Service (2018). Trinidad (PDF supplied)

MODULE 4 (September 22): Hard Currency Credit, Cont’d

- Credit ratings process
- Quasi-sovereign/corporate/structured debt

Required Materials:
Week 4 Lecture video
Moody’s (2019). “Sovereign Bond Methodology,” (PDF supplied)

MODULE 5 (September 29): Hard Currency Credit Wrap-up

- The Importance of the Banking Sector (Guest Speaker)
- QUIZ 2

Required Materials:
Week 5 Lecture video
Schroders (2019). “Corporate Bonds: The case for a core allocation to emerging market debt.” (PDF
supplied)

MODULE 6 (October 6): Local Currency

- Local Currency
- Calculating forwards, local FX risks, hedging
- Yield curve strategies
- Intra-country and cross-border strategies
- Hard Currency or Local Currency? (Guest Speaker)

Required Materials:
Lecture 6 video
Mishkin, Chapters 5-7
FX Background Videos

MODULE 7 (October 13): Introduction to Portfolio Construction

- Intro to Investment Strategies and Portfolio Construction
- Key Portfolio Concepts: Volatility/Outperformance/Information Ratio/Sharpe Ratio/Etc.
- Team Project Review
- QUIZ 3

Required Materials:
7 Concepts Video
Evestment (2012). Investment Statistics Guide. (PDF supplied).

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 5 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020

MODULE 8. (October 20): Introduction to Equities

- The EM Opportunity
- Risk/Return/Efficient Frontier
- The Importance of China and India
- Frontier Markets
- Quantitative Political Risk Analysis (Guest Speaker)

Required Materials:
Intro to EM Video
China, India, Frontiers Video
Bekaert & Campbell, (2017). “Emerging Equity Markets in a Globalizing World." (PDF supplied)
Goldman Sachs, (2014). “EM Cycles Since 1969: Identifying Inflection Points.” (PDF supplied)
Vanguard Research, (2013). “Exploring the Next Frontier: A Review of Frontier Equity Markets.”
(PDF supplied)

MODULE 9 (October 27): Equities Cont'd

- Exploring 4 Types of EM Equities

Required Materials:
Lecture 9 Video
Blackrock (2010). "A Guide to Investing in Closed-end Funds"
Citigroup (2019). “American Depository Receipts (ADRs): A Primer.”
IESE (2009). "Private Equity in Emerging Markets"
Rosier, K. (2014). "The Risks of China's Internet Companies on U.S. Stock Exchanges"
Wilton and Reed (2013). The Case for Emerging Markets Private Equity, IFC

Supplemental Materials:
Bank of America (2014). "Global Wireless Matrix 4Q13"

MODULE 10 (November 3): Equity Valuation

- Valuation Issues in EM equities
- AMBEV case study
- QUIZ 4 (Cumulative though equities)

Required Reading and Videos:

Lecture 10 video
Kramer, A (2018). New York Times, “Selling Real Estate in Russia? Are You Crazy?”

MODULE 11 (November 10): Leverage/Shorting

- Leverage/Shorting/Hedging
- Risk Parity
- Teams 1 & 2 Presentations

Required Materials:
Leverage and Shorting Video

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 6 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020

MODULE 12 (November 17): Relative Value Strategies

- Long/Short Strategies
- Teams 3 & 4 Presentations
- QUIZ 5

Required Materials:
Lecture 12 video
Connor, G. & Lasarte, T. (2010). “An Overview of Hedge Fund Strategies,” (PDF supplied)

MODULE 13 (November 24): Technical Analysis and Timing

- Moving Averages and other Stochastic Measures
- Accumulation/Rebalancing Models
- Technical Basics (Guest Speaker)
- Teams 5 & 6 Presentations

Required Reading: Watch Lecture 13 video; Marber, P. (2011). “Perfect Timing?” Investments &
Pensions Europe. (PDF supplied) Credit Suisse. (2010). “Technical Analysis Explained” (PDF
supplied); assorted Bloomberg articles (PDFs available in Week 13 folder)

MODULE 14 (December 1): The Future of Emerging Markets

- What truly defines an “emerging market”?
- Investment Index issues
- Covid-19/Deglobalization/Future development models
- Teams 7 & 8 Presentations

Required Reading: Drobny, S. “The Family Office Manager: Jim Leitner, Falcon Management.”
(PDF supplied) Schwager, J. “Richard Dennis: A Legend Retires,” and “Bruce Kovner: The World
Trader.”(PDF supplied); BAML (2020), “Bring it Back – Ten Ways De-Globalization
will likely impact your portfolio,” (PDF supplied).

MODULE 15 (December 8): Final Quiz and Team Project

-Guest Speaker
- QUIZ 6
- Final Team project due December 12h 11pm ET

Coursework/Assignments

This is a graduate-level course and graduate-level work, which includes active participation in class
discussions and activities and high-quality written work, is expected. Much of an investment manager’s
success depends on a mix of analysis and communication, therefore effective written and oral
communication will constitute a significant portion of a student’s grade. Written work should be clear,
logical, grammatically correct, spell-checked, persuasive, supported by examples, and backed up by
citations for any data, ideas or other content used. It should represent the student’s best effort. To do
well on the writing assignments, you will need to incorporate what you have learned in video lectures
and course readings.
________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 7 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020

Grading Scale (Standard from Harvard Extension School)

• A and A–: Earned by work whose superior quality indicates a full mastery of the subject, and in the
case of A, work of extraordinary distinction. There is no grade of A+
• B+, B, and B–: Earned by work that indicates a strong comprehension of the course material, a good
command of the skills needed to work with the course materials, and the student’s full engagement with
the course requirements and activities.
• C+, C, and C–: Earned by work that indicates an adequate and satisfactory comprehension of the
course material and the skills needed to work with the course materials, and that indicates that the
student has met the basic requirements for completing assigned work and participating in class activities.
• D+, D, and D–: Earned by work that is unsatisfactory but that indicates some minimal command of the
course materials and some minimal participation in class activities that is worthy of course credit.
• E: Earned by work that is unsatisfactory and unworthy of course credit. This grade may also be
assigned to students who do not submit required work in courses from which they have not officially
withdrawn by the withdrawal deadline. Zero or E grades are assigned to students for missing work.
These grades are included in the calculation of the final grade.

Class Participation

This course covers a significant amount of content and much of the learning comes from in-class
discussion. Online sessions will focus on current market phenomena, portfolio implications, as well as
problem sets to reinforce key concepts. Therefore, students are expected to attend all class sessions,
view recorded lectures, and complete all assigned readings and come prepared to participate. Attendance
will be taken and participation will be evaluated at each class session. At some sessions, short
presentations on required readings may be assigned to specific students and/or groups. A “Discussion
Board” will also be available for questions and comments. Class participation will be graded more on
quality than on quantity, so contributions should be relevant, concise and aimed at moving the
discussion forward and driving toward insight and understanding. You may miss two class sessions
without penalty, but all other absences will result in a zero score for class participation for that session.
Please notify the teaching assistant (via email) prior to the start of class if you will not be in attendance.

Evaluation and Deliverables

Students will have several graded deliverables:

Six (6) Quizzes include a mix of true/false and multiple choice questions that will take 30 minutes with
approximately ten (10) questions.

The Group Presentation and Report are based on the portfolio monitored over the semester. The class
will be broken down into 8 working groups, each covering 1/8 of the class portfolio (a “sub-portfolio”).
Each sub-portfolio will have been 5-6 assets, and each group will be asked to analyze their respective
portfolio with specific questions regarding return, correlation, volatility and other concepts relative to
other assets in the portfolio, as well as major world benchmarks. The project is a mix of quantitative and
qualitative analysis, allowing groups to distribute the required work pragmatically according to
individuals’ strengths. While guidelines will be given out in Session 1, the project will not be due until
the end of the semester.

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 8 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020
1. The PowerPoint presentation will be delivered by the team to the class (20-minute time limit)
and include:
• Background information on each asset
• Preliminary performance summaries for historical reference period

2. A detailed investment report will be due the last week of class including:
• Analysis of fund returns, volatilities, correlations, drawdowns, and specified ratios

Academic Integrity

Common sense warning: Just as ethics and integrity are important in investment management, academic
integrity is important in this course. Please take the time to familiarize yourself with the Harvard’s
policies on academic integrity, which can be found at http://www.extension.harvard.edu/exams-grades-
policies/student-responsibilities. The school has a ZERO TOLERANCE POLICY ON
PLAGIARISM. We also highly encourage you to take two online tutorials created by the Harvard
Extension School (see: http://www.extension.harvard.edu/resources/career-academic-resource-
center/plagiarism-proper-use-sources) to help students understand common scenarios and what
constitutes plagiarism. Other resources include, The Harvard Guide to Using Sources
(http://usingsources.fas.harvard.edu/icb/icb.do). Please visit and use these sites to avoid any
unintentional errors. It is important to understand the standards to which you will be held; ignorance of
the standards will not be considered an excuse for violating them.

Accessibility

The Extension School is committed to providing an accessible academic community. The Accessibility
Office offers a variety of accommodations and services to students with documented disabilities. Please
visit https://www.extension.harvard.edu/resources-policies/resources/disability-services-accessibility for
more information.

You are responsible for understanding Harvard Extension School policies on academic integrity
(https://www.extension.harvard.edu/resources-policies/student-conduct/academic-integrity) and how to
use sources responsibly. Not knowing the rules, misunderstanding the rules, running out of time,
submitting the wrong draft, or being overwhelmed with multiple demands are not acceptable excuses.
There are no excuses for failure to uphold academic integrity. To support your learning about academic
citation rules, please visit the Harvard Extension School Tips to Avoid Plagiarism
(https://www.extension.harvard.edu/resources-policies/resources/tips-avoid-plagiarism), where you'll
find links to the Harvard Guide to Using Sources and two free online 15-minute tutorials to test your
knowledge of academic citation policy. The tutorials are anonymous open-learning tools.

The Fine Print

Workload. The value you receive from this course will be commensurate with the thought and effort that
you put into the endeavor. Students should expect to spend ~3 hours outside of class each week to view
the video lectures first, then read the assigned materials, reflect, and prepare for the next class session.

On Time. Students are expected to arrive to the online classroom on time and stay for the duration of the
class session. If you expect to be late or absent from class – or need to leave early – let the instructors
know prior to the start of class.

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 9 of 10
 THIS IS A DRAFT SYLLABUS SUBJECT TO REVISION AS August 17, 2020
Deadlines. All assignments must be submitted to the correct assignment drop box on the course website
at the specified day and time and late submissions will not be accepted. If you experience any
problems uploading your assignment to the drop box, you should email the document to the instructors.

Please note that, if you email the assignment because you cannot upload it, the email and the relevant
attachment must be received on or before the assignment deadline to be accepted. Should you
experience any internet problems, please call/leave a message for the instructor – this call should occur
before the submission deadline passes. If you are absent the day an assignment is due, the assignment is
still due at the specified day and time. True medical or family emergencies will be dealt with on a case-
by-case basis.

Professional Conduct. Professional behavior is expected throughout the class. This means respectful
communication both inside and outside of class. During discussions, civil discourse should be
maintained at all times and comments should be aimed at moving the discussion forward. This does not
mean that students must always agree with others since reasoned, respectful dissention may be part of
the discovery process and lead to previously unconsidered options.

________________________________________________________________________________________________________________
ECON E-1925: Fall 2020 Page 10 of 10