Trends with Benefits #11: David Semple on the State of Emerging Markets
07 May 2020
In this episode of Trends with Benefits I speak with David Semple, Portfolio Manager for VanEck's emerging markets equity strategy about the state of emerging markets, COVID-19's impact, and how the nature of growth among emerging markets countries has changed.
Is ‘emerging markets’ an artificial construct?
The virus, as David noted during our discussion, has accelerated trends or exacerbated issues present in countries prior to the pandemic. Certain countries may be in a better position to deal with the economic impact. The relative strengths or weaknesses of specific countries are laid bare and highlight another truth of emerging markets: every country is different.
Many investors treat emerging markets as a unique asset class, but if it wasn’t already an asset class today, would it be? Differentiation in demographics, resources or financial position are factors that can drive performance differentials in currency and securities markets.
Then there’s the China question. In the latest evolution of broad emerging markets benchmarks China accounts for approximately 40% of the 'emerging markets' universe. This should cause asset allocators to rethink or, at least, reconfirm their approach to emerging markets exposure.
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