No single ticker was named. Emerging markets ETFs are one way for retail investors to get exposure. Not a recommendation.
EM equities offer historically cheap valuations
The guest argued that emerging market equities present a compelling long-term opportunity due to historically cheap valuations relative to developed markets and structural reforms like Korea's corporate governance initiatives.
The argument
The guest noted that emerging markets represent 60% of the global population and 40% of global GDP, yet only make up 11% of the MSCI ACWI. He argued that long-term structural drivers, such as reducing economic informality and government-led 'value up' programs to improve return on invested capital, will gradually narrow this gap.
The thesis, stress-tested
✓ What validates it
- ✓Implementation of corporate 'value up' reforms in Korea leading to higher ROIC
- ✓Gradual reduction of economic informality in major EM nations
▸ Risks discussed
- ▸High concentration in the technology sector
- ▸Higher cost of capital in emerging markets relative to developed markets
- ▸Geopolitical and political risks inherent to EM countries
Hear it yourself
"They're putting out a bunch of great content, and some of Ian's work is up on there as well. I thought we would start at sort of like a higher macro level with Ian. And then, you know, as we get down into it, we'll talk specific investment strategies and portfolio construction. But what where I think we wanted to start with you is, you know, emerging markets have had a very good run here. Maybe one of the best runs in the last fifteen or sixteen years over the past twelve to eighteen months on a relative basis. So those that have invested in EM have kinda been rewarded, but it seems like the war has kinda brought that to a standstill at least recently."