Emerging markets are different from developed markets in terms of economic cycles. According to Gordon Fraser, portfolio manager at BlackRock there are four different economic cycles in emerging markets.These are sell-off, healing, liquidity on, and activity surge as shown in the chart below:
Click to enlarge
Source: Are you making this emerging markets mistake?, Money Observer
He noted that Argentina and Mexico are in the healing stage while South Korea is in the sell-off stage.
Most of the cities ranked worst for sitting in traffic are in emerging markets. The world’s most congested city is Mumbai, India followed by Bogota, Colombia and Lima, Peru. Among the developed world cities in the list are London, Paris, Rome and New York. Being stuck for hours in traffic not only has a huge negative economic impact but also causes stress and other health conditions and of course waste of productive time and increased pollution levels. At a higher level, high congestion points to failure of public policies in terms of unplanned or reckless development without regard to population levels, infrastructure and the environment.
The following chart shows the world’s worst cities for traffic congestion:
Click to enlarge
Source: RFE/RL
The S&P BSE SENSEX Index of the Indian equity market soared recently after the re-election of the Prime Minister Modi. The index is up just over 10% year-to-date.
Currently the index is trading in the 39,800 range within a striking distance of the 52-week high at 40,312. It remains to be seen if it can surpass the 52-week high and hit a new record.
Similar to other emerging market indices, the Indian benchmark is highly concentrated with a few major sectors dominating the market. In most emerging markets, the banking/financial sector is the biggest sector in the benchmark. The financial sector is the largest sector in the Sensex also. This sector accounts for just over 43% of the index.
The next four major sectors in the Sensex are IT, Oil & Gas, Fast-Moving Consumer Goods(FMCG) and transport equipments. The extremely high allocation to finance in the index is both a huge risk and opportunity.
The chart below shows the composition of the S&P BSE Sensex Index:
Click to enlarge
Source: BSE
Two of the major private sector banks trading in the US markets are HDFC Bank Ltd (HDB) and ICICI Bank Ltd(IBN).
Related ETFs:
Disclosure: No Positions
The following chart shows Foreign Direct Investment in Select Countries as a Percentage of GDP from 2015 thru 2018. Brazil topped the list followed by Colombia. Russia received the least FDI among major emerging countries with just 0.20% of its GDP.
Click to enlarge
Source: RFE/RL