Your topic is: “Emerging Markets Investments in Portfolio Management” You are employed by a leading funds manager who is invested on behalf of many Australian investors in a range of traditional...

Investing in Emerging markets
Running Header: Investing in Emerging Markets
Title: Investing in Emerging markets
Presented By:
Presented To:
Date: 16/09/2017
Contents
3Introduction
4Discussion
4Political Scenario of the chosen Emerging countries
5Economic performance of the chosen emerging countries
8Investment Performance
8Country Fund for the selected emerging countries
9Conclusion
10References
Introduction
Emerging markets (also known as developing countries) are becoming the major drivers in the world global growth. International Monetary fund (IMF) has estimated that growth rate in emerging markets at is expected to outpace that of its developed counterparts in the coming decade. The emergence of emerging country well illustrated years after burst of US housing bubble. Financial crisis 2008 was one of the longest and painful crisis in the history which collapsed Wall Street stalwarts like Lehman Bros. Sub prime crisis has hit global economy very hard. While developed countries collapsed under the crisis, few emerging countries flourished and assisted global economy to progress ahead and thereby saved the world from a global disaster. Brazil, India, China are the three countries which were widely touted as saviours of this global recession.
Brazil, India, China with Russia and South Africa has become BRICS which became very prominent emerging economies. With buy out of trouble banks and quantitative easing US, Japan and Europe are clawing back to their previous states. Investments started flowing back to developed countries in last few years. The emerging countries have slowed down during this period but Economists are foreseeing that there developing countries will continue to progress over the next decade.
GDP is one of most important factor which indicates the magnitude of the economy. Share of India and China in world GDP is miniscule in 70s. As of 2009 China and India combined share in world GDP has grown to 17%. GDP Projections from PwC consultancy has shown by 2050 China and India will dethrone US, Japan from the top slots. Share in world GDP of China, India is estimated to be doubled by 2050 (35%). While share of US, Japan, UK, Germany and France and other developed countries are expected to shrink (Shambaugh, 2013).
In this context, it makes up a very important and useful step to analyze the economies of the emerging countries for the sake of investment. In this connection two countries, China and India are selected for critical evaluation of their financial status in the last few years and an attempt is made to analyze the prospective chances of investment in these countries. For the last few years, both these countries are investigated for the sake of their economic and political histories. Further it is analyzed of the two countries stability factors, GDP factors and growth rate as well interest rates of the two countries are investigated with an objective to find the potential investability. Apart from evidential financial information there is also focus on the social factors like employment rates as well as unemployment rates in these two countries. Further as industrial profile of the country makes up an important factor of evaluating the growth rate of the countries, an insight into the key industries portfolios and the external current accounts are analyzed and based on the information retrieved inferences are drawn to judge on the investment opportunities in the countries. China and India are two emerging countries to be watched for the next few decades as well. MSCI, the emerging markets (EM) Asia index has captured that the large and mid cap representation of the Asia markets is better than several other emerging countries. The indexing was done comprehensively with consideration to about 85% of the capitalization in each country. China is reported to have about 33.78% of the total index, India has about 18.06% and other countries like south Korea, Taiwan, Malaysia etc have reasonably good indices for the promotion of the investment in the country.
Discussion
Political Scenario of the chosen Emerging countries
Political stability is one of the key factors that largely determine growth and asset pricing of an economy. Among the BRICS, China and India are at much better spot politically
.
With single party government, political risk is comparatively low in China; Communist Party of China (CPC) is the founding and ruling political party of China. China’s most powerful decision-making body is Politburo of the party. Even though political stability is far better than any other emerging country, China suffer from transparency. There is very little transparency in the rules and its application. This makes a bit of a challenge for a foreign investor. However comparatively China is very stable and predictable, companies hardly face into any problems unless they have fights with Chinese partner and operating in a politically exposed area. China also has very little business interruptions, strikes. Overall China has a positive and stable political environment for many years. With politburo’s election approaching, pace of China’s economic reforms may slowdown as stable economy is warranted during the election year. This may further slow down China in the coming few years, but long term outlook is very promising.
Election victory of BJP party with Mr. Narendra Modi as PM in May 2014 has brought India in to a sweet spot. Politics have always been one of the risks to India growth story. Unlike earlier stints, BJP now have full majority has formed government on its own without support of any other political party. This is much needed stability factor in the political scenario of India. Hung...