Portfolio Managers: Emerging Economies

By Paola Pecora what they have in common Iraq, Bangladesh, Egypt, Zimbabwe, Argentina? These countries are the new stars in the portfolio investment radars international managers. After the financial crisis of 2008, investors were by emerging markets where rapid profits could obtain in a short time, something that contrasted with slow growth and nothing explosive economies of developed countries. And so China, Brazil, Russia, India, the countries of the so-called BRIC group, were the stars of the moment to invest. Today the financial managers seek to invest in failed States, countries that are characterized by a social, political, and economic failure with weak or ineffective Governments, often with little control over vast regions of its territory, with difficulty for the provision of basic services, strong corruption, criminality, that they usually have refugees and displaced people, with great economic social degradation and financial, and some truly are: Zimbabwe, Afghanistan, Iraq, Pakistan, Nigeria, Ivory Coast. Many of these countries are categorized in financial terms as frontier markets. Frontier markets are among others: Argentina (from emerging to border in 2009), Bangladesh, Bulgaria, Costa de Marfil, Croatia, Estonia, Jordan, Kenya, Macedonia, Malta, Nigeria, Qatar, Slovenia, Tunisia, Viet Nam.

These markets are considered exotic, unreliable, little liquid, low level of foreign investment, with less mature capital markets and economies, and leaving plenty of room to grow. The portfolio managers are promoting these markets as unlinked developed, i.e. that their bags usually follow opposite price trends. Many of the emerging markets that have historically been attractive to investors partly because of the low correlation with markets developed, have been moved lately more in line with the latter, thus lowering the benefits of diversification, which is what is being sought in part to invest in markets of low correlation with the developed border. Emerging markets have been growing in recent years and their economies with the global economy increasingly integrated.

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