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Investor Jeremy Grantham, 79, is famed for his dour views on the global investment scene. You’d expect as much from a guy whose clients have included US Vice President Dick Cheney. It’s noteworthy, then, that he’s dripping with optimism about emerging-market stocks.

In its most recent investment letter, his Grantham Mayo Van Otterloo & Co. advised recipients to go “heavily overweight” on developing markets in Asia and beyond. Grantham is even encouraging his kids to load up on the only asset class, arguably, with the potential to offer 4.5% real annual returns over the next decade. “What I would own is as much emerging-market equity as your career or business risk can tolerate,” Grantham told clients.

Could this be a contrarian indicator? The investment guru equivalent of the so-called magazine-cover curse?

Perhaps not, when you consider that Asia’s emerging markets boast so much of what the West lacks: young, growing populations; swelling middle-class consumer sectors; infrastructure booms; privatization processes in their infancy; pressure for better corporate governance; and promising political reform stories. So long as governments and bureaucrats do the heavy lifting with financial reforms, the growth potential in emerging Asia is vast indeed.

Risks abound, too, of course. Trade-war threats emanating from Donald Trump’s White House are a clear and present danger for export-reliant Asia. So is the specter of new Federal Reserve Chairman Jerome Powell raising US rates aggressively. What’s more, that would set off a tug-of-war between the Fed and a US Treasury Department actively seeking to devalue the dollar.

But Grantham, remember, has been right on a couple of vital investment calls since 2000, when he warned about the trajectory of US stocks. In 2007, he also raised a red flag on what he termed a bubble in bubbles. As Grantham wrote in May 2007: “From Indian antiquities to modern Chinese art; from land in Panama to Mayfair; from forestry, infrastructure and the junkiest bonds to mundane blue chips – it’s bubble time.”

So long as governments and bureaucrats do the heavy lifting with financial reforms, the growth potential in emerging Asia is vast indeed

The collapse of Lehman Brothers 16 months later demonstrated the extent to which most asset classes had got drunk on excessive central bank liquidity. That, of course, raises valid questions about whether today’s markets face a similar easy-credit reckoning. After 2008, the Fed, European Central Bank and others followed the Bank of Japan down the quantitative-easing rabbit hole. That fueled powerful equity rallies from New York to Singapore.

One reason to think Grantham has a point about developing Asia is politics.

It’s easy to be cynical about self-described agents of change promising the world and delivering little. In South Korea, though, newish President Moon Jae-in is raising corporate taxes on the highest-earning conglomerates that run roughshod over the economy. In Indonesia, President Joko Widodo is finding his reformist mojo to attack graft, increase transparency and turn talk of better governance into reality.

In India, Prime Minister Narendra Modi is working to reduce bureaucracy, increase the national tax base and open key sectors from insurance to defense. Is it a work in progress? Absolutely. Does New Delhi still face daunting challenges? The unfolding scandal at the public-sector Punjab National Bank surely proves that. Either way, India is at least working to raise its economic game.

What about China? Anyone’s guess, of course.

Investors don’t tend to make much money betting against President Xi Jinping’s government, but growth north of 6% year after year is no replacement for the bold restructuring needed to avoid a “Minsky moment,” or the point when a debt-fueled boom comes to a ghastly end.

Even so, China’s rapid growth – and even Japan’s longest growth spurt in decades – is a nice thing for Asia to have. It’s also a reason to think the typically doom-and-gloom Grantham is on to something as he gushes about developing markets.

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