As macro-political risks in emerging markets have increased since the 2008 – 2009 global financial crisis, Nikko Asset Management analyses the growing importance of top-down analysis in managing emerging market portfolios.
Given the increasing frequency and intensity of political – economic crises, a more systematic method of measuring political risk and evaluating its impact on market prices is required for emerging markets. According to Nikko Asset Management, a central thesis of investing in these markets, given their volatility and dispersion, is that there are better opportunities for risk-adjusted returns through a multi-asset approach.
Nikko Asset Management advocates a ‘three pillar’ approach to emerging markets: investing in a broader range of asset classes; top-down, dynamic management of risk allocation to these countries / asset classes; and explicitly incorporating a systematic measure of political risk and its impact on emerging market assets.
Views on the current health of the Chinese economy differ widely, but it’s hard not to be impressed by the progress the country has made in the last 20 years. Gross domestic product (GDP) per capita has risen more than ten-fold to around US$8,000 over this period, with much of this growth occurring in the […]