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Saturday, 28 January 2023
Asia Equities Are Mostly Higher: What Does This Mean For Investors?

Asia Equities Are Mostly Higher: What Does This Mean For Investors?

2022-10-31

 

In recent years, the evolving global economy and geopolitical uncertainties have put a damper on stock prices for most global markets. However, some markets have posted stronger performances than others. It’s no surprise that some of the best performing stock markets globally have been those in emerging economies. While many of these markets are at different stages of their economic development, what they have in common is their openness to global influences and their ability to adapt.

According to the World Bank, emerging markets now account for more than half of the global economy. As such, it’s only natural that emerging markets have been the source of much of the past year’s stock market volatility.

What makes an emerging market an emerging market?

A developing market is defined as an economy in transition from a lower to a higher income level. To be considered an emerging market, an economy must have a per-capita GDP (PPP) of $2,000 or less. It must also have a market value of less than 10% of the global economy.

Brazil

With an emerging market status, Brazil has the ninth-largest economy in the world and is Latin America’s largest country by area and fifth-largest in population. In recent years, commodity prices have fallen significantly, which has had a negative impact on the Brazilian economy. However, Brazil continues to grow. Its per-capita GDP was $8,966 in 2017, up from $8,821 the year before.

China

China is the world’s largest emerging market and the largest economy in Asia. It is also the second-largest economy in the world, though few people in the West are aware of its true size. In 2017, China’s per-capita GDP was $8,642, which made it the ninth-largest economy in the world. In that year, China produced 12.5% of the world’s goods and consumed 20.3%.

India

India is the largest and most populous country in South Asia. It is also the second-largest economy in the world, though few people in the West are aware of its true size. In 2017, India’s per-capita GDP was $8,495, which made it the 15th-largest economy in the world. That same year, India produced 9.5% of the world’s goods and consumed 15.4%.

Russia

 
 

Russia is the largest country in Eastern Europe and the Caucasus region and the third-largest in Europe, with a GDP (PPP) of $2.3 trillion. Russia has an emerging market status with the World Bank.

Mexico

Mexico is North America’s second-largest economy and one of the wealthiest countries in the region. It is also one of the most open to global trade and investment, with notable investments from Toyota, Ford, and other global companies. Mexico had an emerging market status with the World Bank from 2007 to 2011, but declined it in favor of a more diversified designation.

Turkey

Turkey is a transcontinental country and a member of both the European Union and NATO. With a population of over 79 million people, it is also one of the largest emerging markets in the world. With a per-capita GDP of $8,721, it is also the 15th-largest economy in the world.

Prospects for emerging markets in 2018

The World Bank has projected that the global economy will grow at a 3.9% rate in 2018, up from its previous projection of 3.7%. Growth in emerging markets is expected to be faster than in advanced economies, with the Russian economy expected to grow by 4.3% and the Brazilian economy by 3%.

Bottom line

Emerging markets are attractive to investors because they represent a wide spectrum of economic and political risks. At the same time, these markets have strong potential for growth and offer better risk-adjusted returns than many other developed and developing countries.

It’s important for investors to understand the unique characteristics of each emerging market they choose to invest in and the risks involved. Before making a significant investment in any one emerging market, investors should consider consulting a professional investment advisor.

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