Capital and Context Podcast Ep.5: Emerging Markets: Hot or Cold?

Описание: Emerging Markets: Hot or Cold? | Capital and Context, Ep 5

In this episode of Capital and Context, Mark Insley and Sam Hallett explore one of the most dynamic and debated areas of global investing: Emerging Markets (EM). As global economic power continues to shift, they unpack whether EM remains a compelling opportunity for investors in 2026 — and why portfolio managers are increasingly treating it as a core allocation rather than a tactical play.

From frontier economies and structural growth stories to China’s uncertainty and EM debt opportunities, Mark and Sam provide a comprehensive view of the opportunities and risks shaping the emerging market landscape.

Understanding Emerging Markets Today

Mark and Sam begin by examining the broader EM investment universe — moving beyond the traditional focus on equities or bonds to explore the full opportunity set across regions and asset classes.

Key Concepts Explored:

Diversification Benefits: Emerging markets offer access to economies that are less correlated with developed markets, making them a powerful portfolio diversifier.

Return Potential: The MSCI Emerging Markets Index delivered strong performance last year, rising 34% and significantly outperforming developed markets, driven by a weaker US dollar and strong earnings growth.

Modernizing Economies: Many EM countries are transitioning beyond commodities and manufacturing into services, technology, and advanced industries.

Regional Opportunities & Investment Themes
1. Frontier Asia & the “China Plus One” Strategy

Sam highlights Frontier Asia as his preferred opportunity due to limited analyst coverage and high potential for alpha. Countries benefiting from global supply chain shifts away from China are seeing strong capital inflows and economic expansion.

2. South Africa’s Market Appeal

Mark outlines the investment case for South Africa, emphasizing its strategic position among emerging economies and its relevance within diversified EM exposure.

3. China — Bull vs Bear Debate

The discussion explores China’s complex outlook:

Bear Case: Ongoing property market issues, slowing economic growth, and high debt levels.

Bull Case: Transition toward services, domestic consumption, and growth in technology and semiconductor sectors.

4. India’s Structural Growth Story

India’s long-term outlook remains compelling, supported by urbanization, favorable demographics, strong GDP growth, and policy reforms aimed at improving economic transparency and stability.

Emerging Market Debt & Portfolio Positioning

A major theme of the episode is the growing attractiveness of EM debt.

Why EM Debt Now?

Higher yields compared to developed market sovereign bonds

More disciplined fiscal management in many EM economies

Exposure to both local currency and hard currency debt

Sam explains why he is currently overweight EM debt and discusses blended strategies from managers such as Vontobel and PIMCO. The team also shares potential allocation ranges across portfolios in a strong EM bull scenario.

The Case for Re-engagement in Emerging Markets

For modern portfolio construction, EM is no longer optional. Mark and Sam explain why:

EM is becoming a “constant” strategic allocation for global investors.

Policy changes remain the primary driver of long-term growth.

Frontier markets may experience a late-cycle rally due to strong valuations and earnings potential.

One Market to Watch for 2026: Vietnam — driven by strong growth prospects and its potential upgrade from Frontier to Emerging Market status.

Key Takeaways for Investors

Emerging markets provide meaningful diversification benefits due to lower correlation with developed economies.

Structural growth stories in countries like India and Vietnam remain powerful long-term drivers.

EM debt currently offers compelling value relative to developed market bonds.

China presents both opportunity and risk, requiring careful positioning.

Policy shifts and macro trends are critical indicators when evaluating EM opportunities.

Featured Holdings Mentioned

Fidelity Index Emerging Markets (Passive Exposure)

Artemis Smart GARP Global Emerging Markets

Dragon Capital Vietnam Enterprise Investments Investment Trust

Vontobel Emerging Market Debt Funds

PIMCO Emerging Market Blended Debt Funds

Learning More

To better understand emerging markets, follow global policy developments and track long-term economic drivers through trusted financial news sources such as the FT’s World Emerging Markets coverage.

Connect With the Show

Visit our Website: https://www.capeberkshire.co.uk/

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