Date: 27th Oct 2022 | Publication: Ausbiz
The days of basket buying are over
Mugunthan Siva of India Avenue Investment discusses the evolution of the MSCI Emerging Markets Index, looking not only at the composition shifts by individual nation but also by sector. He says India’s weight has shifted rapidly post COVID from 8% to 15, suggesting it reflects India’s emergence post-COVID which has helped to strengthen its macro fundamentals, along with heavy losses in other significant markets such as Russia and China. While no one can dispute it’s been a terrible time for the broader emerging market universe in recent years with the index not far off its pandemic lows in US dollar terms, at the individual country level, Mugunthan says the dispersion of performance has been stark. “Emerging Markets are more an opportunity set rather than an asset class in the post globalisation world, noting country returns have started to become significant as investors break down the universe into regional and country Funds. As such, he says buying an emerging markets basket to cast a wide net across many growth-oriented businesses needs to be revisited. Mugunthan also discusses the impact currency has on EM performance along with the outlook for the Indian economy over the quarters ahead.