WHY EMERGING MARKETS? The rationale for investing in emerging markets is strong, based primarily on their potential to generate superior economic growth over the longer term, as reflected in rising stockmarket valuations. This has proven to be the case since emerging markets first became a recognised asset class in the 1980s and is likely to remain so for the foreseeable future. This potential for growth reflects not just demographic trends, with populations rising and becoming more urbanised, but also the extent to which emerging market wealth still lags behind that of the developed world; a gap now being filled by an aspirational middle class. Indeed, recent years have seen most of the growth in economic activity around the world generated by emerging markets to the extent that the economies of the developed and emerging world are now of roughly comparable size, though the stockmarket value of emerging markets remains but a fraction of that of developed markets. At the same time, developed markets have tended to accumulate debts over recent years, saddling themselves with government debt which will take a decade or more to pay off. This will act as a brake on growth for years to come. Emerging markets, by contrast, have relatively strong fiscal positions and low levels of public and private sector debt. And as the current emerging market countries become developed, others less developed stand ready to take their place. Countries and markets that may have appeared uninvestable just a few years ago are now able to offer meaningful investment opportunities thanks to improving monetary and fiscal backdrops and advances in corporate governance. The Nigeria or Kazakhstan of today, which may seem peripheral, could well be considered mainstream tomorrow. Emerging markets also offer important diversification benefits for investors, both between emerging and developed markets and, perhaps more noticeably, within emerging markets themselves. This offers the prospect of higher returns at lower overall risk. As investment capital around the world continues to become more mobile, an increasing number of investors are able to benefit. Finally, the inefficiencies that still abound in emerging markets, such as infrequent newsflow and unfamiliar reporting standards may lead to a fundamental undervaluation or overvaluation of a company. This mispricing provides particular benefits for stockpickers such as Ko Gyo Holdings Ltd, who can use their knowledge and experience to exploit these opportunities to generate superior returns for their clients. This applies equally to long only portfolios and to portfolios where short positions are employed. Participate in the profits ! Emerging markets are one of the most popular areas for high-return investments. More information ? kogyoholdingsltd
Posted on: Sat, 16 Aug 2014 00:34:39 +0000
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