BY CLICKING ON “I AGREE”, I DECLARE I AM A WHOLESALE CLIENT AS DEFINED IN THE CORPORATIONS ACT 2001.
What is a Wholesale Client?
A person or entity is a “wholesale client” if they satisfy the requirements of section 761G of the Corporations Act.
This commonly includes a person or entity:
This is an excerpt from the full report which details how structural factors have impacted emerging markets’ growth prospects since the Global Financial Crisis, and how this requires a new investment mindset to successfully navigate the asset class. Investing in EM now necessitates laser focus on differentiation, diversification, income as a source of potential return and a preference for quality.
In our view, EM’s disappointing performance is primarily explained by the sharp growth downshift experienced after the Great Financial Crisis. In turn, that slowdown reflected multiple and interrelated factors including a less powerful China pull; the difficulty EM experienced in replacing external growth sources with internal ones; the broad deglobalization trend; rising indebtedness; and the worsening political backdrop. Below, we delve into those dynamics in more detail.
The key factor that changed in 2010 was that EM’s growth boom ran out of steam. At its peak, EM was growing at an almost 8% pace, but by the time the Covid pandemic hit in 2020 the pace had fallen to just over 3%. Where growth is concerned, compounding matters: at an 8% annual growth rate, an economy doubles roughly every 8 years but at a 3% rate of growth, the doubling occurs every 23 years. Moreover, and as we show, the deceleration was not concentrated in just one or two areas but cut across all EM regions.
This paper has traced the changed economic and fundamental backdrop facing EM, noting that markets have already become aware of these changes and have steadily repriced the asset class. The question then becomes, do those changes require a different approach to investing in the asset class? Our view is that the answer is a resounding “yes.” Below we spell out some of the implications of this new EM investing paradigm: