FTAdviser.com

Advertising

Managers within the IMA Global Emerging Markets sector are faced with a mass of contradictions when sifting through potential stocks and weighing up the investment potential for different countries.

On the one hand, many of these markets are now unrecognisable from the way they were even a decade ago. The increasing trend of globalisation is lessening the “us and them” rivalry between the developed and developing world, with Western businesses aware that their competitors in places like China and Russia are potentially in better shape to face the future than they are.

While the days of corruption, civil unrest and injustice are far from being over, the sheer demographics of the emerging markets, with a growing proportion of the population at the age where they can work, along with better healthcare and increasing GDP, means they are a force to be reckoned with.

Many companies in these markets are also bringing their working practices in line with the global norm, with more attention put on offering shareholder value, with a growing dividend culture. They are also focusing on better reporting practices and a greater level of transparency in the way they operate.

However, there is still some way to go before emerging markets are on a level playing field with their developed market counterparts.

This was at the heart of the Emerging Markets Forum, held in Hanoi, Vietnam at the end of June. Delegates looked at not only the divergence between emerging and developed markets, but also the mismatched growth and opportunities among the individual emerging markets.

The conclusion of the forum discussions was that: “Individual countries must achieve global standards. Greater coordination among all the exchanges and capital markets is required and efforts must be properly synchronized and working with, rather than against, the private sector.”

There was also consensus that policymakers should loosen exchange restrictions and there should be greater cohesion between securities regulators and central banks, as well as a united strategy for development across the emerging world.