After a Bumper Year, What Next for Emerging Markets?

Investors in emerging markets have had a rough ride in recent years, but the outperformance of China and technology stocks could be a cause for optimism

Ben Johnson 15 December, 2017 | 10:01AM
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Emerging markets stocks make up 12% of the global stock market. Thirty years ago, these stocks represented less than 1% of the world’s investable equity market capitalisation. These markets are dynamic and have changed dramatically in the past three decades, and the pace of change has only accelerated in recent years.  What has driven their performance in recent years and how will their makeup evolve in the future?

The MSCI Emerging Markets Index was launched on January 1, 2001. From its inception to the end of September 2017, the index posted annualised gains of 9.89%, versus 4.99% for its developed markets counterpart, the MSCI World Index. Though these figures are compelling, they mask the gut-wrenching volatility that has characterised this 16-year time period.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Alibaba Group Holding Ltd ADR111.96 USD0.00Rating
Tencent Holdings Ltd462.60 HKD0.00Rating

About Author

Ben Johnson

Ben Johnson  is director of passive funds research at Morningstar.