Posts tagged: emerging markets

US companies versus MSCI Indices Free Float Market Cap…

BAML map

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Here’s What The World Wants

In a new report, Goldman Sachs economist George Cole says the planet is  transitioning from the “Age of commodities” to the “Age of consumer durables,”  which will present new opportunities for global investors as this phase change  materializes. The key is the rise of the middle class consumer in emerging markets (EM). “Over the coming decades the spending power of the EM middle class – the  ‘expanding middle’ – will cause tectonic shifts in global consumption,” says  Cole. “The next set of structural opportunities in EMs will therefore depend on  understanding not just the macro story of growth, but also the micro story of  spending and consumption – in other words, understanding what the world  wants.” Historical consumption patterns have the answer, says Cole: consumer durables, a category that includes everything from washing machines to sports cars.

spending ladder chart

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Emerging Markets Will Emerge From the Ashes

Emerging markets have been hammered this year. The iShares MSCI Emerging Markets Index is down 11.39% year-to-date at the time of this writing. At the end of the day, the world economy is substantially lagging the U.S. economy. Additionally, the policy decisions of the U.S are benefiting the U.S economy while not particularly helping the emerging markets. Investor sentiment regarding emerging markets is near rock bottom. As a contrarian, I see this as a potential positive. For those investors looking to add an emerging markets component to their portfolio, this could be a great buying opportunity.

Fundamentals of Emerging Markets
Emerging markets, despite the recent performance, have many positives working in their favor. They now represent approximately half of global Gross Domestic Product (GDP) and their share should continue to grow in the coming years. According the International Monetary Fund ( IMF ), developed economies will expand by 1.2% while emerging economies will reach an average growth rate of 5.3% this year.

Many of these countries have large, young populations that will be critical for supporting economic growth. Read more »

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