Emerging markets are often lumped together under the acronym ‘GEM’, or global emerging markets. In reality, this is not a homogenous mass of similar companies trading at similar valuations. Although certain sections of the market have grown expensive, this is a richly diverse universe where it pays to be discriminating. Value can almost always be found, and stock selection can help drive superior long-term returns.
This is not a question of chasing short-term share price reversions or gauging whether the next earnings release will be a hit or a miss. It requires an investment process that doggedly assesses long-term corporate value – and whether the current share price offers a worthwhile discount. A company’s strengths and vulnerabilities extend beyond traditional financial statements. They include corporate governance, social considerations, and the company’s approach to the environment, because such ESG issues can seriously impact earnings power, assets and liabilities over the long term.
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