India Fund

Why some emerging markets outperform others

Date: 11th Jan 2022 | Publication: Ausbiz

Emerging markets underperformed developed markets significantly in 2021. In fact, since COVID emerged, emerging markets have been behaving differently says Mugunthan Siva from India Avenue. Higher dispersion with the advent of lesser globalisation, he says. For example, MSCI China fell 21.7% and MSCI Brazil fell 11.4%, whilst India rose 28.4%, Russia rose 20.4%. Mugunthan says investors have to realise that these markets can not be grouped into one category called Emerging Markets (or markets that didn’t make it into the developed classification) and expect them to perform uniformly. He says each of these markets has its own unique characteristics which drive investor behaviour. Additionally, Mugunthan says in markets like India, local investors have become more oriented towards wealth accumulation by investing, which is changing the volatility characteristics we typically associate with less developed equity markets.

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