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Chapter 3. Emerging Markets: Shaping the world of tomorrow

Why investors cannot afford to ignore Emerging Markets

Published on
12 May 2021
Read time
2 minute(s) read

There is one main reason why you, as an investor, should consider Emerging Markets: Growth. People can be hesitant to invest in the region because of political, economic or social issues, but when approached in the right manner, with risk management and due diligence, investors can reap the rewards.

The EM tech space is expanding quickly, and on multiple fronts: internet, ecommerce, cloud and data centres.
In Asia for example, we have seen JD.com, Sea Ltd and VIP Shop emerging as new giants competing with Amazon. Meanwhile, in Russia, a company named Yandex takes market share from Google every year and has extended its business to ride-sharing by merging with Uber in Russia.

China is on track to becoming the world’s leading market for electric vehicles (EV) and clean energy.
The country currently invests 1.5% of its GDP annually to combat pollution and support clean energy industries such as solar, wind, and hydroelectricity. Government initiatives aim to have 7 million electric vehicles sold in 20251.

5G rollout, autonomous cars and the Internet of Things (IoT) require semiconductors, and the leading manufacturers are based in Asia.
As big innovators, Taiwan Semiconductor Manufacturing Co. (TSMC) and Samsung Electronics are driving rapid expansion within global technology markets. Their expertise, knowledge and firepower are used to invest in and develop cutting-edge technologies that transform our everyday lives.

Emerging Markets structurally benefit from long-term demographic trends and improving living standards.
We are convinced that underpenetrated sectors are a great source of growth stories.

For example, the banking and insurance penetration in Mexico is still very low compared to other countries, so is the car ownership penetration in India. So we are keen to invest respectively in financial and automobile companies there, as they have huge capacity for growth.

Another area of interest is innovation within healthcare, medicine and biotechnology, with the aim to lower medical costs and improve healthcare efficiency. This demand is mainly driven by Asian countries, including China, in the context of their ageing populations.

Want to know more?

Discover our flagship EM equity fund Carmignac Emergents:
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Chapter 4 Coming soon - The patient investor’s approach to Emerging Markets
1Source: Chinese State Council, Energy Saving and New Energy Auto Industry Development Plan (2020-2025). 2Source: International Energy Agency (IEA), Global EV Outlook 2020. 3Source: Carmignac as of 26/02/2021. Samsung Electronics since 1999 and Taiwan Semiconductor Manufacturing & Co since 1998. These holdings may have been sold and bought again between their first entry in portfolio and today. 4Source: IMF, 2018 data - [“Mexico, an opportunity for financial inclusion”](https://www.imf.org/en/News/Articles/2019/05/29/sp052919-mexico-an-opportunity-for-financial-inclusion "") 29/05/2019. 5Ministry of Human Resources and Social Security (MOHRSS) of the PRC, 31/12/2018.The analysis of financial instruments in this presentation was not prepared in accordance with applicable regulatory provisions regarding the independence of financial analysts. The Management Company is not subject to the prohibition of entering into transactions in connection with the relevant instruments before the presentation of this material. This material is presented for illustrative purposes only to point out certain instruments which are (or which were) in the portfolios of certain Carmignac Funds and it does not aim to promote a direct investment in the instrument mentioned herein. The portfolios of Carmignac Funds may change without previous notice.

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Advertising material. This document may not be reproduced, in whole or in part, without prior authorisation from the management company. This document does not constitute a subscription offer, nor does it constitute investment advice. Carmignac Emergents is a common fund in contractual form (FCP) conforming to the UCITS Directive under French law. Access to the Fund may be subject to restrictions with regard to certain persons or countries. The Fund is not registered in North America, nor is it registered in South America. The Fund has not been registered under the US Securities Act of 1933. The Fund may not be offered or sold, directly or indirectly, for the benefit or on behalf of a "U.S. person", according to the definition of the US Regulation S. The Fund presents a risk of loss of capital. The risks and fees are described in the KIIDs (Key Investor Information Document). The Fund’s prospectus, KIIDs, NAV and annual reports are available in English at www.carmignac.co.uk, upon request to the Management Company or for the French Fund, at the offices of the Facilities Agent at BNP PARIBAS SECURITIES SERVICES, operating through its branch in London: 55 Moorgate, London EC2R. This material was prepared by Carmignac Gestion and/or Carmignac Gestion Luxembourg and is being distributed in the UK by Carmignac Gestion Luxembourg UK Branch (Registered in England and Wales with number FC031103, CSSF agreement of 10/06/2013).