- Emerging markets (EM) form a wide and diverse investment universe. They play an extremely important part in the global economy but remain relatively under-represented in financial markets.
- Investing in EM requires understanding certain biases. For example, China represents 34% of the EM equity universe but only 2.5% of the hard currency debt index, while 54% of the EM hard currency debt index is now in investment grade territory.
- Correctly analysing the macroeconomic and political risks in emerging markets is an important part of the investment process. But bottom-up selectivity matters.
- Responsible investing – taking into account environmental, social and governance issues – still has a long way to go in emerging markets. Yet there is an interesting opportunity for active investors engaged in dialogue with corporates and governments alike.
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