Yesterday the CFA Society hosted a webinar led by Mark Yusko, at Morgan Creek Capital Management: The Global Search for Alpha: All Roads Lead to emerging markets. Emerging market economies have experienced disruption of pandemic lockdowns, capital outflows, commodity price shocks, and supply chain disruptions. Policy makers have responded aggressively and creatively. It appears this […]
Currency substitution or “dollarization” is when a country legally recognizes the US dollar as legal tender, in place of or in addition to its own. Dollarization has many advantages for emerging market countries, according to a recent article in National Review. By dollarizing, an emerging market country can eliminate exchange rate risk, and completely avoid […]
A lot of analysts are concerned that Covid-19 is going to devastate emerging markets. After all, they are less prepared to deal with massive demands on their domestic health infrastructure. Worse yet, a higher portion of the population in emerging markets likely lives in crowded conditions. This view is corroboratedd by recent stories showing a […]
There is a broad trend towards deglobalisation, and an increasing emphasis on regional groupings. This is especially true in international trade policy. Developed countries are becoming more protectionist, but developing countries are opening up to each other, creating regional trade agreements. The result is a patchwork of regional trade agreements, and a reversal of the […]
EM/FM countries have unique growth prospects no longer present in the developed world. Several secular trends support faster growth for EM/FM markets as a group. Demographically, EM/FM countries outside of China are younger, and family size is often larger. Nearly 90% of the global population under 30 is in emerging markets. According to research from […]
Over short and medium time frames, emerging markets are inevitably driven by capital flows as much as company fundamentals. Fund flows have been consistently out of EM/FM countries over the past decade. Consequently, most developed world investors are underallocated to EM and FM stocks by any reasonable standard. GMO, which advises institutions on asset allocation, […]
Emerging and frontier markets have been broadly out of favor for over a decade, and are trading cheaply, however you measure valuation. According to Morgan Stanley: The 2010s were the worst decade for emerging stock market returns since the 1930s. When the coronavirus began to impact stock markets in mid-February, emerging markets were 18 percent […]
Emerging and frontier market stocks are cheap, widely hated and underowned among institutional investors. Yet they represent a major long term opportunity. A macro regime change could lead to massive upside for investors who position appropriately. As a group, EM/FM stocks typically have multi-year trends that are separate and sometimes directionally opposite from developed markets. […]