Although Israel and Portugal were promoted over the past 11 years with Greece promoted and then relegated again the addition of some wealthy Arab Gulf states, which are classified as emerging markets, roughly counterbalances the promotions. Instead, the reason for the flatlining relates to the particularly strong performance of US equities, rather than the poor performance of emerging markets. But there is a deeper reason why emerging markets have not only stayed low as a proportion of global equity market capitalisation but had that position in the first place.
That is because of the way the emerging market equity universe is defined in relation to international indices. First, such measures tend to be based on the free-float portion of emerging markets rather than the whole universe. In addition, companies that have below a certain threshold of free float or trading volume are excluded.
That also counts against emerging markets in international comparisons. So the rules governing the composition of equity indices lead to an understatement of the true scale of emerging markets. Although the two are often used as synonyms they should not be. Emerging economies are typically those that fall below a particular threshold of GDP per head. Emerging markets, in contrast, are defined by different criteria.
Briefing: Emerging markets fail to catch up | Magazine | IPE
That is why there are several developed economies, as defined by income per head, which are defined as emerging markets. South Korea is the classic example, as it is a wealthy country but there are concerns about the convertibility of the currency. The Arab Gulf states also show a big discrepancy between their wealth levels and the accessibility of their markets. Qatar, with the highest GDP per head in the world when measured by purchasing power parity, is classified as an emerging market.
Other relatively wealthy countries, such as Bahrain and Kuwait, are classified as frontier markets. Of course the opening of the mainland Chinese markets to foreign investors looks set to dramatically increase the relative weight of emerging markets in global indices. As the Chinese A-share market becomes increasingly open, the share of emerging markets as a share of global equities will surely increase.
At some point, the trend could once again reverse when China is promoted to the ranks of the developed markets.
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However, Marsh says such a shift will take a while. There are also reasonable grounds to put China in a category of its own, rather than include it as an emerging market. There is a remarkable divergence in the China market indices used by global investors. Whereas the MSCI China — the one overwhelmingly preferred by international investors — shows an average annual increase of only 1.
It is another salutary reminder that headline figures rarely tell the whole story in investment as elsewhere. Summary available online. Asset region: Global.
Closing date: Asset class: Large Cap Growth Equities. Asset region: Global Developed Markets. Asset class: Local Currency Bonds. Asset region: Global Emerging Markets. Eurasian Economic Union: All countries are included with the exception of Russia, which is a major trading power in its own right and inclusion would distort the emerging market figures. Brazil is a major trading power and is excluded.
Gulf Cooperation Council: Oman is included as it is the smallest of the Oil producing nations, is diversifying away from this industry and is a gateway on the BRI to the Middle East. Here are a few takeaways, statistics courtesy of Trading Economics. Europe The Greek economy is currently growing at 1. Elsewhere, Sri Lanka grew by 3.
Other central Asian states: Tajikistan at 7. Africa Algeria grew at 1. Central America Costa Rica grew at 1. Should China add product categories to the FTA it signed off last year with the EAEU then these figures will immediately further — and significantly increase. The Caucasus remains in limbo with the EU, while China has been busy, albeit mindful of the various regional tensions, in investing in infrastructure throughout the region, using it as a southern transshipment route to the EU.
That appears to be paying off.
Paul Kennedy-Doing Business With Kuwait (Global Market Briefings Series) (2004)
Over to Europe though, and its a different story. The EU remains impartial to China trade — they have not concluded a proposed Free Trade Agreement with China first tabled several years ago, and Brussels remains suspicious of Beijing. Africa is a huge continent so it is to be expected it yields mixed results, although for the most part they are sluggish to positive. When the significance of this kicks into the trade sphere we are likely to see a marked improvement.
- The Willow Tree.
- 20 issues for businesses expanding internationally paper.
- Read Doing Business With Bahrain Global Market Briefings.
- Shutterbug (June 2016).
- Global theory of minimal surfaces: proceedings of the Clay Mathematics Institute 2001 Summer School, Mathematical Sciences Research Institute, Berkeley, California, June 25-July 27, 2001.
The Middle-East emerging markets are recovering from war and sanctions, it will be some time before the infrastructure build that is being put in place will reap trade rewards. Central and South America are also mired in economic stagnation, although there are some bright spots.
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China is also making investments, again it will be some time before these pay off in terms of trade growth. As mentioned, that larger figure includes trade with larger countries that have historical trade ties with China or are part of a trade bloc that does. However I would expect this to increase as infrastructure projects currently under progress are completed and begin to add trade enhancement and connectivity value. It will be interesting to see how these figures change year on year. We will review these statistics on a 6 monthly basis.
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