Page 11 - April ISQ 2021

INVESTMENT STRATEGY QUARTERLY

Still Correct To Be This Excited Towards

The Emerging Markets?

Chris Bailey, European Strategist, Raymond James Investment Services Ltd.

“
An emerging market is a country
where politics matters at least as

much as economics to the market. ” – Ian Bremmer

Based on average allocations over the few years, Whilst still including the economies of South Korea and Taiwan
emerging markets have been a popular investment for within the emerging markets is now more controversial because
of their respective economic gains over the last forty years,
global fund managers in recent months. Are such
today’s most significant individual country is China. Unsurpris-
thoughts based on good analysis or not? ingly the world’s largest individual population at just over 1.4
billion, also has the world’s higher total GDP (at least on a pur-
Typically an emerging market only has some characteristics of
a developed market, but does not fully meet its standards. Cur- chasing power parity specific basis).
rent MSCI Emerging Markets index allocations are led by China, However, there are currently a lot of potentially controversial
followed by South Korea, Taiwan, India, Brazil, South Africa and issues with China. During March, the United States, Canada,
Russia, with the first four names focusing overall exposure to Britain, and the European Union announced business and eco-
Asia. Meanwhile the latest earnings expectations data from the nomic sanctions on China, regarding the latest alleged
International Monetary Fund (IMF) estimate emerging market treatment of the Uyghur Muslims, which has been an issue of
countries - on average - to again outperform ‘advanced econo- complaint for quite a long time. Certainly the timing of this is
mies’ alternatives.

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