Strategies That Fit Emerging Markets

Posted by Carl Gould on December 09, 2015

CEO’s and top management teams of large corporations, particularly in North America, Europe, and Japan, acknowledge that globalization is the most critical challenge they face today.

An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market. This includes countries that may be developed markets in the future or were in the past.

What are the Emerging markets in 2015?

Global market research agency, GfK, has released part of its 2015 forecasts for sales of technology devices, showing that the stable global forecast hides multi-billion dollar changes at country level. According to a recent GfK report, the Top 10 growth markets in 2015 will all be emerging economies.

China’s slowing. Russia’s flailing. Is any emerging market worth putting your money in? We’ve found seven of them. In an article written by, Ian Bremmer in a FORTUNE article, he mentioned

Here are the lucky seven:

  1. 1. India
  2. Indonesia
  3. Malaysia
  4. Mexico
  5. 5. Colombia
  6. 6. Poland
  7. 7. Kenya

(Bloomberg) — In its 2015 Annual Guide, Bloomberg Markets spoke with six investors and strategists on what they’re expecting from various sectors of the financial markets next year.

1. Don’t Bet the Farm on China

Frances Hudson’s investment horizon stretches to decades. One reason, says the global thematic strategist at Edinburgh-based Standard Life Investments Ltd., is that demographics and other long-term drivers of securities markets are easier to predict with accuracy than factors that affect markets during shorter periods.

For example, many market watchers expect that China’s growth will lead to an increase in global demand for food commodities, Hudson says. The thesis is that the world “needs more food to satisfy growing middle-class appetites for meat—which I think is wrong,” she says.

2. Put Half Your Money in Emerging Markets

Eighty-five percent of the people in the world live in emerging markets, Jerome Booth says. They account for more than 50 percent of global gross domestic product, more than 50 percent of energy consumption and more than 50 percent of industrial production. So the emerging markets are not an asset class, he maintains: “It is the bulk of humanity, the bulk of economic activity on the planet.” They’re collectively huge and individually multifaceted, he says, and should be treated as such by investors.

3. Beware of Regulatory Risks

Sonia Kowal, the president of Zevin Asset Management LLC, says her firm’s focus on environmental, social and governance factors has helped reduce risk in client portfolios. Analyzing ESG factors, she says, can help flag companies likely to fall under regulatory scrutiny for polluting, for example.

Managers and analysts at Boston-based Zevin begin with companies’ self-reported ESG data, but that’s just a starting point. “It also has to be counterbalanced with an external view,” she says. To do that, her team checks news stories and consults with nongovernmental organizations.

4. Make a Run at Frontier Markets

Heidi Richardson is preparing for an ascent in Kenya. Richardson is training for the Kilimanjaro Marathon, and as a global investment strategist at BlackRock Inc., she also expects stocks to climb in the east African nation. “For longer-term investors, I like the frontier markets very much,” San Francisco–based Richardson says, singling out Argentina, Kuwait and Nigeria as well as Kenya. “Those are the truly emerging of the emerging markets.”

5. Count on Another Strong Year for the Dollar

The U.S. dollar’s world-beating rally has only just begun, Sue Trinh says. The senior currency strategist at Royal Bank of Canada says the greenback’s surge in 2014 was driven mostly by investors exiting bullish bets on other currencies, including the euro, yen and Australian dollar. The second leg of the U.S. dollar’s gain will come when the Federal Reserve begins its tightening of monetary policy, she says. “That’s going to be the only game in town, really, with the rate hikes that we expect from June onwards,” says Hong Kong–based Trinh. The dollar climbed against all its major counterparts in 2014, and the Fed’s actions in 2015 will continue to ripple through currency markets, Trinh says.

6. Prepare for a Big Drop in U.S. Stocks

The surge in market volatility that saw $5.5 trillion in global equity value wiped out from September to October in 2014 is just a harbinger of things to come, Gerald Buetow says. Stock valuations are still too rich and are artificially supported by central bank stimulus in the U.S. and Europe, says Buetow, chief investment officer at Innealta Capital.

Article by:  Jon Asmundsson Rocky Swift

Related Topics:

Top trends facing the world in 2015

Carl Gould is a business strategist, and growth expert. He has written 5 books in the area of creating business success, and is the co-host of the weekly radio program, ‘Quit and Get Rich’ ( Carl and his team of experts advise companies and organizations to grow to the next level. What is the next level for you?


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