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Emerging markets the place to be?

August 17th, 2010 · No Comments

Now that many developed markets have had a lost decade (and another one on the way)..
Credit Suisse launching an emerging market fund, after a rather thorough 52p study available here (in pdf).

We’ll have some of the more interesting conclusions

  1. Yes, these markets, on average provide higher returns
  2. Over the past century, yearly returns of Australia (7.5%) , South Africa (7.2%), The US (6.2%), Sweden (6.2%), New Zealand (5.9%), Canada (5.8%) were the markets with the highest returns, These were all ’emerging markets’ at the beginning of the last century
  3. Surprisingly perhaps, this has less to do with higher economic growth than with higher risk
  4. The higher economic growth is normally already discounted in valuations
  5. There is a wide variety in performance of emerging markets. Countries like Argentina and Zimbabwe have looked promising at one stage, only to be demoted to ‘frontier market’ at the next. War, civil strife, revolution, military dictatorship, economic mismanagement, socialism and the like are risks that can’t be discarded out of hand.

Tags: Emerging Markets