By Tassos Stassopoulos, Alliance Bernstein
Rapidly ageing societies in developing countries represent important markets for consumer companies. However, it should be understood that vast cohorts of elderly people heading into the sunny uplands of their lives does not necessarily imply a bright future for investors.
It’s easy to overlook the ageing trend in emerging markets. Countries like India and China are home to the world’s youngest populations in terms of size. Yet as birth rates decline and healthcare improves, older people will constitute a growing percentage of the population. In the top 12 emerging markets, the over-65 demographic is growing at an annual rate of approximately 3.7 per cent (see chart) — nearly double the rate in developed countries. Continue reading »
Barring a late turnaround, emerging markets look set for their worst week in 10 months, as nervousness over the dollar’s resurgence and US interest rates overpowered last week’s policy easing from the European Central Bank, fast FT reports.
The FTSE Emerging Index has lost another 0.3 per cent today, its seventh straight day of declines, taking this week’s tumble to 2.8 per cent – the longest run of declines and the biggest weekly drop since November 2013 (see chart).
However, the Frontier 50 Index, made up of recondite bourses in countries like Argentina, Bahrain, Vietnam, Oman and Ghana, rose for a sixth day running on Friday, taking the gauge’s gain this week to 1.6 per cent and the highest level since 2008. Continue reading »
US jobs growth slowed in August, contradicting a host of other data showing strength in the world’s largest economy. Nevertheless, the weak data is unlikely to sway the US Federal Reserve from hiking rates next year, though it is possible that its language may now turn a little less hawkish.
So while US monetary tightening remains in prospect, it makes sense to assess which EM countries have worked hard to shore up their vulnerabilities to prepare for the receding tides of liquidity – and which have failed to do so. Continue reading »
Global institutional investors regard emerging market (EM) equities as the most attractive of all major asset classes, a new survey of 111 institutional investors conducted by ING Investment Management shows.
A year to the month after Morgan Stanley coined the term “fragile five” to denote five large EM economies – Brazil, South Africa, India, Indonesia and Turkey – that were considered vulnerable to financial market turmoil, investors have become seduced by the risk/reward relationship in much of the EM universe. Continue reading »
By Jonathan Fenby, Trusted Sources
There’s nothing like an acronym or a catchy label when it comes to emerging markets. The master alchemist, Jim O’Neill, set the pace with the formulation 13 years ago of the four-nation BRICs (with or without a final capital S for South Africa). Fidelity followed that with the MINT collection of Mexico, Indonesia Nigeria and Turkey constituting MINT.
Then Morgan Stanley chipped in with Fragile Five, which – such are the vagaries of nomenclature – includes five members of the previous two aggregations.
Now, a new and potentially more durable grouping is emerging – even if it does not lead itself to an acronym that trips off the tongue. The best I can come up with is CIMI – or, if you twist it to give Mexico rather than China first place, the marginally more memorable MICI, though that would invite too many columnists to compare them to Disney’s mouse. Continue reading »
Emerging market (EM) economies are rebounding from an export malaise that has marred their fortunes since early 2012 and rendered several of them vulnerable to the tapering of US monetary stimulus.
So, is an EM export boom now once again in prospect?
The answer, say analysts, varies sharply according to which side of a stark dichotomy each emerging market falls. Manufacturing-led exporters, particularly in Asia, are riding a wave of resurgent demand from the US and Europe. But commodity-orientated exporters in Latin America and Africa are hurting from the slow expiration of the commodity supercycle. Continue reading »
By John Calverley, Standard Chartered
Concern over rising inequality has increased in recent years. While inequality has fallen between countries, as rapid economic growth has helped emerging economies catch up with the developed world, there seems little doubt that inequality within countries has risen for most.
Technology is just one factor at play – along with globalisation, taxation and reduced union power – but its effect on economies is a key to understanding how income gaps evolve over time. Continue reading »
Move over multinationals – the locals are coming.
Sound unlikely? Actually not, according to a new study by the Boston Consulting Group. It has identified 50 emerging market companies giving the big boys a run for their money in their own backyards.
These “local dynamos” – like Indian e-commerce company Flipkart, Chinese mobile-phone company Xiaomi, Bank Rakyat of Indonesia, Discovery Health of South Africa or Banorte of Mexico – may not be international names, but they have successfully carved out innovative domestic niches for themselves. Continue reading »
Increasing numbers among an estimated 2.5bn “unbanked” people in poorer countries are turning to their mobile phones to pay bills, transfer money and receive salaries. And now – a survey has found – the practice is spreading fast beyond its traditional heartland in sub-Saharan Africa to other parts of the emerging world such as Latin America.
The survey conducted by the GSMA, an industry group that claims membership from some 800 mobile operators in 250 countries, found that operators were offering 219 live services in 84 countries at the end of 2013, up from 179 live services in 75 countries a year earlier. A further 113 mobile money services are planned for launch, the GSMA said.
Mobile money services were rolled out in 2013 in nine new markets – Bolivia, Brazil, Egypt, Ethiopia, Guyana, Jamaica, Tajikistan and Togo, the GSMA added, quoting survey results. The survey polled 110 service providers in 56 countries. Continue reading »
Although the violence in Iraq has so far had a muted impact on global oil markets, if prices continue to rise there could be some nasty consequences in store for the more fragile of emerging market economies (see chart below).
And while a spike would hurt countries that rely on energy imports, it won’t necessarily translate into quick and easy economic gains for EM hydrocarbon exporters, say analysts. Continue reading »
How do you bank the “unbankable”? The question could hardly be of more importance to small businesses in emerging markets, an estimated 200m of which are starved of the finance they need to grow.
One somewhat unlikely – but increasingly popular – answer is through psychometric tests. By yielding profiles of loan applicants’ honesty, intelligence, aptitude and beliefs, the tests facilitate lending to otherwise “unbankable” borrowers who do not possess a credit history, collateral or accounts.
Artful questions are key to the tests’ efficacy, say finance executives and industry experts. For example, if you want to assess a prospective borrowers’ honesty, it would be naïve to simply ask if they are honest, or if they prize integrity. Continue reading »
Geopolitical risks rank as the top worry among global investors, eclipsing economic concerns such as a weakening Chinese economy and slowing emerging market (EM) growth, according to a survey of 941 investors announced by Barclays on Tuesday.
The survey, conducted in the second quarter of this year, contrasted with surveys in the first quarter of this year and fourth quarter of 2013, which showed China/EM growth and the tapering of monetary stimulus by the US Fed as top worries for the following 12 months (see chart).
The survey also found that EM investors favoured equities, local currency debt and high yielding benchmark bonds as investment choices. Continue reading »
Accelerating urbanisation – especially in India and China – is set to boost emerging Asia’s share of global spending on infrastructure and capital projects over the next decade, slashing the developed world’s market share by 2025, according to a PwC report released on Monday.
The report, for which Oxford Economics researched trends in 49 countries on six continents, estimates that the world’s urban population is currently swelling by around 1.5m people a week, mostly because of rural-urban migration in the emerging world. In India, for example, the urban population is likely to rise by some 500m over the next four decades. The Pakistan city of Karachi grew by 80 per cent to 13m in the decade to 2010. Continue reading »
Several big risks – including China’s cooling property market, instability in Ukraine and the prospect of tighter global financial conditions over time – still stalk emerging markets (EM) in spite of a reduction in overall risk levels compared to last year, the World Bank said in a report on Tuesday.
In the 154-page report, Global Economic Prospects, the World Bank trims its global GDP forecast for this year to 2.8 per cent year-on-year, down from 3.2 per cent previously. But, it adds; “Despite the early weakness, growth is expected to pick up speed as the year progresses and world GDP is projected to expand by 3.4 per cent in 2015 and 3.5 percent in 2016.” Continue reading »
Stronger readings in China helped drive a marginal uptick in emerging market (EM) manufacturing activity in May, breaking a declining trend that has lasted for five consecutive months, according to purchasing manager index (PMI) data aggregated by Capital Economics.
The Capital Economics data, which showed an EM manufacturing PMI for May of 50.1 compared to 49.6 in April, coincided with a slight upswing in investment bank sentiment toward the Chinese economy. Nomura raised its China GDP forecast for the year, while Barclays saw a further easing in Beijing’s monetary policy. Continue reading »