Navigating Emerging Markets: Trends & Opportunities
Trends and opportunities in emerging market equities.
Investing in emerging market1 equities has transformed from a generation ago. Economic diversification has improved the breadth of the market, while favorable demographics and stable economic and monetary policies have improved the quality of opportunities. However, across emerging markets there are divergent risk and return profiles, and we believe that demands an experienced, actively managed approach, like that of Martin Currie.
Current Perspectives from Martin Currie
Investment InsightsSeptember 10, 2018
Take a Deeper Dive into Emerging Market Trends
A large proportion of emerging market populations now access the Internet principally via smartphones. This is spurring phenomenal innovation and driving huge growth in e-commerce. Some perspective on India: Of its 650 million mobile phone users in 2017, some 300 million fell into the smartphone category. The socioeconomic impact is huge, especially on health care and education, which is empowering India’s large poor population.
Made in the Trade
Emerging markets have become a major force in global trade. Twenty-five years ago, two-thirds of global trade occurred between advanced economies, but today, two-thirds of global commerce involves developing nations. Yet some of the existing trade agreements that helped define the expansion of trade over this time period are now being renegotiated, and in some cases new agreements have been implemented, which could mean new opportunities and challenges ahead.
Change Is the Only Constant
In recent years local capital markets have developed and regional pools of savings have deepened in emerging markets. On a sovereign level, there are no more dollar pegs to defend, and only two to three emerging market countries have significant deficits. These changes are likely to challenge a widely held belief that emerging markets are vulnerable to U.S. dollar strength and may enable more resilient markets and economies. At a country-specific level, the recent presidential election in Mexico represents a major change in the way that economic and social policies have been managed over the past three decades.
The Changing Sources of Global Trade
Sources: Martin Currie and Statista. Statista sources: IWF, WB, WTO.
1 Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. These nations are sometimes also referred to as developing or less developed countries. Developed markets refers to countries that have sound, well-established economies and are therefore thought to offer safer, more stable investment opportunities than developing markets.
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Equity securities are subject to price fluctuation and possible loss of principal.
Active management does not ensure gains or protect against market declines.
International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility.
Diversification does not guarantee a profit or protect against a loss.