CAN THE “DECOUPLING” THEORY SAVE AFRICA FROM THE CREDIT MARKET CURRENT FREEZE ?

Decoupling is an Economic concept that holds that Asian and emerging markets in the Middle East and Africa, have broadened to a point where they no longer depend only on the United States for growth. This means that because of their insulation, those economies would not be badly affected by the current slowdown or recession in the U.S. Believers in this theory are bullish about Stocks with a strong correlation to Emerging Markets.

So far, Decoupling worked for Caterpillar (CAT),  General Electric (GE) (Despite the last Q1 earnings), Coca-Cola (COKE), NESTLE, DIAGEO, GOOGLE, EBAY, GOLD index -(Indian Women are now the largest purchaser of consumer Gold in the World driving up the price of the Ounce)- Basically any global player that drives a high percentage of revenues from doing business with developing Countries in Asia, Africa and the Middle East.

We need this scenario to hold for some time to save some of the planned U.S investment in Sub-Saharan Africa. Most of the financing that was pre-authorized can only be relieved from the credit freeze if large financial institutions continue to believe that the current markets conditions would only affect Developing Economies to a lesser degree. The bulk of those investments would bring needed jobs and growth to the region and it would be damaging if because of a US recession and a general freeze of Credit, some of those projects were stalled !