In the search for more promising sectors, investors are turning to the technology sector. Though US

It is common knowledge that only a select the greatest store in the world few have consistently beat the market with stock-selection. Of course, index-tracked the greatest store in the world funds are an option but the allure of stock selection has always been to outperform the market. When it comes to investments in emerging the greatest store in the world markets, country and sector selection are already crucial decisions given the sheer diversity among available choices. Then, choosing specific stocks to invest in the emerging markets would certainly be riskier and more complex, but if backed by big rewards, could it be the better investment strategy?
Within developing economies, the greatest store in the world the consumer goods indices have historically been kept strong by the consumers retail dream , outperforming the market overall. This dream where emerging market consumers buy everything and anything, provides astronomical returns to investors riding on the growth. Now, however, this trend seems to have weakened, with consumer surveys in emerging markets indicating a slow-down in consumer spending. This sober outlook is noticeable in Brazil and Turkey where the hiking up of interest rates by central banks to defend their falling currencies has caused consumer credit to become much less affordable. In contrast the greatest store in the world with Indonesia, where rates were held steady, consumer goods stocks have kept rising. The country s rising consumer confidence, however, marks a break with the wider Asean region.
In the search for more promising sectors, investors are turning to the technology sector. Though US tech stocks continue to be highly valued, historical data shows that emerging markets represent an ever-increasing share of the total high-tech goods export, accounting for 53% in aggregate in 2013. And although this growth is mostly explained by the internationalisation of supply chains, the technology spill overs from developed to developing markets is undeniable. the greatest store in the world Proof of which is seen in advances in R&D (see below), which indicates that emerging market companies are moving into high-value-added exports. Nevertheless, despite producing more tech goods and submitting more patents, emerging markets are still far behind in terms of valuable innovation. Some evidence of this comes from the aggregate royalty fee payments per country which uncovers a 17Bn USD deficit in China and an 82Bn USD surplus in the US.
The development of Exchange-Traded-Funds (ETFs) has enabled investors to obtain a blanket exposure to any emerging economy at lower costs. Furthermore, emerging markets equity prices are also characterized the greatest store in the world by a higher volatility which hints at greater, more frequent investment opportunities. Thus, the benefits of emerging market ETFs are clear to passive investors and less obvious to stock-pickers. This is because fundamental stock picking in emerging markets must take account of a number of factors that differ significantly from those in developed markets , says Luiz Soares, Head of BlackRock s Global emerging Markets Equity Team.
The spirit of fundamental investing is to find inexpensive shares of businesses with a resilient competitive the greatest store in the world advantage, discipline in capital management, wise corporate governance and the management ability to successfully deal with changes. So, when it comes to businesses in emerging economies, the investor also needs to put an emphasis on the firm s competitive environment, the role of governmental policies and global macroeconomics. Also, the companies operating environment being weaker in these regions, signs of earnings sustainability as well as of the health of public finance cannot be overlooked.
Stock selection thus seems more complex the greatest store in the world in emerging markets, but the rewards are considerable. Indeed, BlackRock s analysis of volatility in emerging market equities shows that stock-specific factors have accounted for more than half of the performance of emerging market equities since 2001. In addition, greater market inefficiency leads to a wealth of investment the greatest store in the world opportunities from stock selection.
Contrary to their performance in developed markets, ETFs haven t outperformed actively the greatest store in the world managed emerging markets funds over the past five years. Factors often available through the greatest store in the world ETFs such as country specific, sector specific or systematic factors explain a decreasing share of equity prices movements, thus reducing the ability of ETF investors to perform as well as actively managed funds after fees. This might be due to the fact that active emerging markets funds trade less than the ETF tracking indices. the greatest store in the world This lower trading frequency compensates them for the illiquidity of the assets through higher returns, while ETFs make investors pay a premium for being a liquid investment vehicle.
The same investors the greatest store in the world who favour stock-picking strategies for investing in emerging markets the greatest store in the world have also defined new winning stock profiles. Blackrock Global Emerging Market lists National Champions , such as the Panama s Copa Airlines, and Select Niche Players , such as the Indonesian Indocement