Emerging Innovation: Three Trends for Growth Stock Investors
Emerging market (EM) countries have long relied on commodity cycles and low-cost manufacturing for export-driven growth. But a wave of corporate innovation is changing that, helping to drive growth from within and providing equity investors with higher quality, sustainable opportunities across many countries.
Investors in EM stocks are facing challenges with countries like India and Brazil still struggling to contain COVID-19. The MSCI Emerging Markets Index rose by 6.5% this year through June 30 in US-dollar terms, trailing the MSCI World Index s 12.2%. Growth stock returns were weaker. But as the earnings outlook improves, we believe that three powerful long-term trends, driven by innovation, are creating growth opportunities that will persist through the pandemic and beyond.
Rediscovering the Appeal of Emerging Market Equities
Emerging-market (EM) stocks, often considered risky in a crisis, rebounded in 2020 even as the COVID-19 pandemic spread globally. As vaccines and other favorable conditions unfold, investors have good reasons to consider EM equities in 2021 while strategically considering their potential risks.
Emerging-market (EM) stocks were largely shunned as the COVID-19 crisis took hold, but they re starting to attract more attention. After suffering since March, net flows into EM equity strategies have rebounded and turned positive in the fourth quarter. And in 2020, the MSCI Emerging Markets Index rose by 19.1% in local currency terms, outpacing developed-market (DM) stocks (