Английский язык. Практический курс для решения бизнес-задач

It is also likely that there will be broader support for emerging markets globally, as their pivotal role in the new world order emerges. Potential political and economic instability in the emerging markets could create havoc for the world economy. The recognition that lack of economic opportunity provides a fertile breeding ground for terrorism are expected to solidify global support for measures aimed at reducing instability in the world’s developing regions. Greater stability would have a positive effect on emerging markets, reducing the risk premium and boosting equity values. Even a focus on just the largest markets would likely boost the overall asset class, as «big ten» alone accounts for over 60% of total emerging markets capitalization (based on the MSCI Emerging Markets Free index).

Another stimulus to the long-term economic performance of emerging markets is greater recognition of free, open, transparent markets in promoting economic growth. Despite the noisy protests of «anti-globalization» groups at recent multinational meetings, there is a growing consensus that economic development promotes personal freedom. Greater acceptance of the linkage between economic development, free markets and individual freedom is likely to increase over time, stimulating growth in emerging capital markets.

Leading economists with influence on emerging markets policymakers have been arguing that free markets solve problems most effectively. They show the importance of three key characteristics for growing economies – openness, macro stability and small government. Wider acceptance of these views can be expected to promote long-term, stable growth.

Evidence that this is already occurring can be seen in Asia. Asian companies and policymakers demonstrate a clear movement away from the old economic model that prevailed prior to the 1997-98 financial crisis towards a more open, market-driven system. The old model was one in which the consumer saved actively, banks lent carelessly, and borrowing corporations over-invested with poor returns. While creating the illusion of steady growth, this model was in fact unsustainable.

While the degree of progress towards a new Asian economic model varies from country to country, our observations confirm a general shift towards a framework where consumers spend more and borrow more. Lending institutions in turn have tighter lending standards, putting corporations into competition for capital and necessitating higher returns on investment. This new paradigm offers the prospect of more sustainable growth and higher valuations for investors.

5. Assessing the Long-Term Fundamental Case

The fundamental case for emerging markets investment remains sound. The two decades since these countries first made forays into the capital markets are only a short period in world economic development and a fleeting moment in history. Yet during this period emerging markets have come a long way in establishing sound fiscal and monetary policies, restructuring their economies, addressing corporate governance, and improving their economic fundamentals. Keeping this in mind, the potential for continued rapid, positive change in these economies and markets is still very strong.

Long-term fundamental positives for the emerging markets include:

– Large, rapidly industrializing populations

– Undervalued currencies

– Declining current account deficits

– Improving infrastructures

– Competitive wages

– Increased competition, reform and restructuring

– High savings rates

– Long-term propensity toward growth

Of course, emerging markets vary a great deal in their political realities, their cultural and national identities, and their legal and economic institutions. Many emerging market populations are still in poverty and lack the basic means for development. Great attention needs to be paid to understanding the multifaceted nature of these countries. In short, investment in these markets remains challenging. However, we believe that with use of a wide array of information and skilled application of disciplined analytical tools, it is possible to avoid troubled areas and selectively invest in high-return countries and companies.

6. Conclusion

We think investors should look past the current market anxiety and make a careful and objective appraisal of the present opportunities in the emerging markets. We believe this asset class will serve investors extremely well in the long term, and that the current valuations and outlook justify an increase now in emerging markets allocations for global fund sponsors. The current uncertainty, while uncomfortable in the near term, provides a classic long-term buying opportunity.

Source: Ronald Frashure, Charles Wang of Acadian Asset Management, 2003. www.oycf.org

Essential Vocabulary

1. magnitude n – величина, размеры; важность, значимость

2. World Bank – Мировой банк