Finweek English Edition - - IN THE NEWS -

are in a pe­riod of rel­a­tive un­der­per­for­mance, there i s still rea­son to be­lieve that i nve s t o r s c a n f i n d s o me g o o d op­por­tu­ni­ties. Over the long term, the emerg­ing-mar­ket story is a pos­i­tive one.

“A f as­ci­nat­ing t heme t hat has de­vel­oped over the last 10 or 15 years in emerg­ing mar­kets is how the po­lit­i­cal econ­omy has evolved in some places,” says Michael Hug­man, a strate­gist with In­vestec As­set Man­age­ment’s global emerg­ing-mar­kets team. “What we’ve seen in some of the elec­tion cam­paigns we’ve had this year, such as in In­dia and Brazil, is that the top­ics that are be­ing dis­cussed are in­fla­tion, the sta­bil­ity of cur­ren­cies, growth and jobs, which are the same dis­cus­sions that we have in Europe and the US at elec­tion time.”

Hug­man be­lieves that the changes to this more ma­ture un­der­stand­ing and di s course among t he wider pop­u­la­tion hap­pens slowly, and so it can go un­no­ticed, but it is an im­por­tant in­di­ca­tor of how emerg­ing mar­kets are chang­ing.

“I f you t hink back to t he f i r s t Brazil­ian elec­tion in this demo­cratic pe­riod, you didn’t have th­ese lev­els of sen­si­ble dis­cus­sion on eco­nomic pol­icy,” he says. “I ’m not say­ing that it makes struc­tural re­form easy, but hav­ing th­ese things as the core of the de­bate i n emerg­ing mar­kets i s a big change and it cre­ates a huge op­por­tu­nity.”

While we are in a pe­riod of great eco­nomic un­cer­tainty, Hug­man ar­gues that one thing we can be rea­son­ably ce r t a i n a bout i s t h a t e merg­ing mar­kets will con­tinue to grow as a share of global GDP and global mar­ket cap­i­tal­i­sa­tion. By 2030, emerg­ing mar­kets will make up almost half of the world’s listed-eq­uity mar­ket cap.

“There are strong rea­sons for this,” Hug­man says. “Emerg­ing mar­kets are sav­ing a lot more and gross fixed i nvest­ment i s also grow­ing much faster i n emerg­ing mar­kets than i n de­vel­oped mar­kets. This is a recipe for high-pro­duc­tiv­ity growth that will see emerg­ing mar­kets con­tinue to grow their share of global GDP.”

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