Developments in emerging markets

For most of the last three years US markets, led by large-cap growth companies, have surged while other developed and emerging markets have struggled to keep up. As a grouping, emerging markets seem to have lost their lustre and global investors appear more willing to rotate allocations within the US, as opposed to allocating capital outside its borders.

The result is that the valuation gap between the US and emerging markets is widening, as broader developing regions haven’t seen the level of flows to support sustained investment performance.

Some of the big questions looming are whether investors will continue to shun emerging markets, or if lower valuations and recent stimulus measures introduced by China will see these markets rally? Are there other countries or regions that we should be looking at? And do these locations have a place in investor portfolios?

We had Sean Neethling – the head of investments at Morningstar SA – back in the studio to provide us with some of the answers to these questions.