Emerging markets: where will they head this year?

It’s tempted to think about emerging markets as offering the best prospects for growth in 2014. It’s certainly been the case that many positive investors have been happy to buy shares in India and associated countries.

But there are also fears, particularly surrounding Asian economies. In recent years, many countries in the region have been able to reap the benefits offered by foreign investment. What happens, however, if that capital starts to get removed? It’s an interesting question and one that is causing some concern right now.

We should also probably stop at this point to state that there is also an issue surrounding just how positive all that investment has been. The exploitation of natural resources, for example, has not always been welcomed by environmental groups. Although we may primarily, within the pages of this blog, concern ourselves with finance and investment issues, it’s also clear that we can’t ignore wider problems.

So what may happen? The fears are not restricted to a single nation and it’s noted that there are worries surrounding the value of Argentina’s currency. Should we be any less concerned about the sort of political instability that is to be found in Egypt? What happens if the commodities produced in Brazil see a fall in value?

Of course, having the confidence to answer such questions almost immediately means that you will be involved with making predictions and deciding on individual investments. It’s an area that some of us are rather wary of. After all, there are often other events that take over.

This may help to explain why many Fund Managers find themselves spending a lot time thinking about politics. A failure to understand the risks that are associated with political decisions would mean that it would be absolutely impossible to make informed decisions about investing in those very markets.

If you want to buy shares in a company in Turkey, for example, then how could you seek to do that without knowing how the central bank in that country has been behaving? This is probably a good argument for making use of the expertise offered by those in senior positions at Nevsky Capital and other such investors.

What it does mean is that we seem to be facing a period of some uncertainty. It’s often stated that markets are rarely keen on uncertainty and this can certainly be seen to be true. How you go about thinking about these issues may be rather central to your own aims for the coming year.