Emerging Markets: The ‘Next 11’ and ‘Fragile 5’
“Regardless of the way an investor gains access to the emerging markets, it is important to recognize that different factors such as commodity prices, economic development, and political instability can affect each emerging economy differently …Rather than simply weighting securities based on market value, fundamental strategies weight securities based on economic factors such as sales, cash flows, and dividends plus buybacks. With this thoughtful approach, fundamental strategies have historically delivered distinctive and compelling returns over time.”
Consider the economic growth underlying the “Next 11,” a term coined by Goldman Sachs. The group is South Korea, Mexico, Indonesia, Turkey, Nigeria, Vietnam, the Philippines, Iran, Egypt, Pakistan, and Bangladesh. And don’t forget the fiscal deficits and current account vulnerabilities of the “Fragile Five;” of Brazil, India, Indonesia, Turkey, and South Africa.