In our inaugural Emerging Markets Report, we examine some of the most exciting developments across emerging markets. It may come as a surprise to discover that in many industries, emerging markets are not following in the footsteps of developed countries, but rather leading the way.
With the additional advantages of having young populations and steadily rising ranks of middle-class consumers, emerging markets will likely be the engine that drives global economic growth for many decades. In the report, our investment teams and industry experts also offer their insights on how investors may be able to capitalize on all this potential.
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Our equity and fixed-income investments, who spend considerable time in these markets, share their insights on where they believe the greatest opportunities lie. Our Innovation Index also demonstrates emerging markets may lead the next wave of technological breakthroughs.
We Expect Better Performance from Emerging Markets in 2019
If 2017 was about synchronized global expansion and 2018 was about the divergence of U.S. growth and policy away from the rest of the world’s, then 2019 is likely to be about convergence as the United States slows and emerging markets stabilize. The barrage of external factors plaguing emerging markets—including higher U.S. interest rates, trade tensions, and a persistently strong U.S. dollar—will fade and the growth differentials around the world could swing back in favor of the emerging world.
We See Better Conditions for Global Debt Markets in 2019
Financial markets hit a wall in the last quarter of 2018. Several shocks negatively affected market sentiment. The U.S. Federal Reserve (Fed) once again decided to hike interest rates, as was nearly universally expected.
Reasons Not to Worry About a China Slowdown
Justin Leverenz, our director of Emerging Market Equities, shares his views on China’s economy.
Are you concerned about a slowdown in China?
The slowdown in China has been the main culprit for last year’s market panic, but against the backdrop of economic challenges and ongoing trade conflicts, China’s circumstances are largely manageable. Its transition towards a service-oriented, consumer economy is creating concerns because of the resulting growth deceleration, but it is a necessary step for achieving sustainable levels of growth.
Emerging Markets Are a Hotbed of Innovation
Emerging markets are at the forefront of a global change in payment systems. Unencumbered by legacy systems or bricks-and-mortar banking networks, emerging markets can set the pace on electronic payments. A combination of young dynamic populations and governments’ desire to improve financial inclusion is seeing mobile and fintech innovators forge ahead across emerging markets.
China Is Establishing the Future of Retail
Today, China is ground zero for the future of retail. It’s highly likely the West will have to learn from, and adopt, the experiments in retail that are happening today in the East.
Confounding Stereotypes, China Has Become a Tech Powerhouse
China’s rise as a global technology powerhouse is broadly acknowledged, but the scale, nuance, and innovation are not always recognized. Indeed, many in the Western world remain fixated on a host of longstanding China stereotypes: that its tech industry is thriving only because of intellectual property infringement and strict internet regulation (the Great Firewall of China).
Equities are subject to market risk and volatility; they may gain or lose value. Fixed-income investing entails credit and interest rate risks. Bonds are exposed to credit and interest rate risk. When interest rates rise, bond prices generally fall, and share prices can fall. Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes and geopolitical risks. Emerging and developing markets may be especially volatile. The mention of specific countries, currencies, companies, or sectors does not constitute a recommendation by any particular strategy or by OFI Global.
The views presented represent the views and opinions of OFI Global Asset Management. They are not intended as investment advice or to predict or depict the performance of any investment. These views are based on the information available as of the date noted and are subject to change at any time based on subsequent developments. OFI Global and OFI disclaim any responsibility to update such views.
No forecasts can be guaranteed. These views may not be relied upon as investment advice or as an indication of trading intent or holdings on behalf of any investment strategy. The information contained herein is deemed to be from reliable sources; however, OFI Global and OFI do not warrant its completeness or accuracy. Performance data shown represents past performance and is no guarantee of future results. This material does not constitute an offer or solicitation for the sale of any security or financial instrument in any jurisdiction where OFI Global, OFI or OFDI is not licensed to conduct business or where the security or financial instrument is not available for sale. No security or financial instrument is offered or will be sold in any jurisdiction in which such offer or solicitation would be unlawful.