A tale of two emerging market fintech money gushers

I have made no secret about my conviction that Brazil’s Nu Bank (NU) and China’s Alibaba (BABA) are my two fave emerging market’s fintechs of destiny since 2024. Alibaba has risen almost 100% since I accumulated its shares in the mid 80’s in its New York ADR once it was evident that the Politburo had pivoted to Big Bang fiscal/monetary stimulus to goose the dormant animal spirits of investors in Shanghai and Shenzhen, gutted by the traumatic collapse of the biggest property bubble in the history of global capitalism. This policy pivot meant that the CCP embraced Jack Ma as a true patriot of the Dragon Empire and BABA’s prowess in e-commerce, cloud computing and network software made it the regime’s natural AI champion. Think training and inference LLM models with “Chinese characteristics”!

Brazil’s Nu is also up more than 60% since I first wrote about it in this post to help my friends benefit from a fintech idea I had sourced in Latin America’s economic colossus, both these fintech ideas have been big time winners in 2025. Elementary Gorilla Game investing 101 my dear Watson! These will remain my only BRICS puppies since I missed India’s PayTm, Russia is a no-no and South Africa is too scary to visit without the right Boer jungle guide and my Afrikaner brother in law has now lives in the suburban veldt of Redmond, Wash.

Nu’s digital bank now counts half of Brazil’s adult population as clients and has now exported its hypergrowth, risk management obsessed business model to the vast underbanked prole consumers in Mexico and Colombia. São Paulo bankers and VCs I respect assure me that Nu is a 30% EPS growth story for both 2026 and 2027. They do not see any systemic credit risk on the horizon as long as resurgent inflation does not force the Fed to opt for tight money and a Lula win not trigger a military coup after next October’s election. I believe that 3.5% CPI could mean Fed rate hikes despite Trump’s power to control the waves ala King Canute and my call is that Brazil’s next president will be from the center-right and not from Lula’s corrupt loony-left PT. So I am a happy buyer/put seller on Nu at 17.8X forward earnings.

ARPU has now surged to $11.20 and the deposit base is growing at 40% a year for a bank whose next big EM markets could well be Indonesia, Nigeria, Yorkshirestan in the UK and Philippines. India is the final frontier but I doubt if the protectionist clowns in its deep state will give a Brazilian bank a license even though the Aadhaar card scams have shown that Indian banks are just not ready for prime time in the Digital Age. I can easily see Nu Bank attract 500 million clients across the world in three years, up from 120 million now. This makes Nu the Samba King of the Rio Carnival for me on the NYSE!