The investment promise of emerging markets is enticing: to profit from the superior growth of underdeveloped economies. But the reality can be disappointing. In the five years to the end of 2007, the MSCI Emerging Markets index nearly quintupled in value in dollar terms. However, ten years later, it still stands below the peak then reached.
There are many reasons why emerging markets (EMs) have been less rewarding than predicted. Economic growth doesn’t necessarily translate into corporate profits, which is why investment in most Chinese companies (other than a few tech giants) has been persistently [...]