In this exclusive paper, the Emerging Markets Equities team looks at the themes and opportunities for the next ten years.
Looking towards the next decade, the prospects for countries in Emerging Markets (EM) are not uniformly bright. New challenges have arisen, such as the rise of protectionism, and how poor countries will recover from COVID-19.
Nevertheless, there are a multitude of opportunities for active investors in EM. The crucial difference from a long-term investment perspective will, however, be to identify the leaders and winners and avoid the rest. The leaders will be those companies which, by virtue of their intrinsic competitive advantages, will be able to deliver above-industry average growth, and consequently stock-price performance.
The importance of good ESG practices is growing in EM, however disclosure levels lag behind Developed Markets. Fundamental research and engagement help to form an informed opinion and bring about positive change.