Emerging markets: Why to expect plenty of positive surprises

EMs

Gary Greenberg, head of Hermes emerging markets and lead portfolio manager, looks at the outlook for developing countries and why they need to start transitioning.

Despite China’s slowdown, India’s blackouts, Russia’s rigged election and the violent suppression of strikes in South Africa, global emerging markets (GEMS) are up 10% this year in US dollar terms.  This is a creditable performance in the face of disappearing demand from Europe and an ongoing downgrade in current year earnings forecasts, now down 10% from peak levels in February. While the performance of GEMs this year is reasonable, the outlook is far more complex than the breathless commentary of the past few years would suggest. Developing economies have grown by exporting to the...