Why emerging markets have changed

Emerging markets have sometimes promised more than they have delivered, but circumstances may be tipping in growth investors’ favour. Will Sutcliffe, head of our Emerging Markets Team, explains why it’s an opportune time to invest in the asset class.

Background:

Will Sutcliffe is the head of Baillie Gifford’s Emerging Markets Team and co-manager of our Emerging Markets Leading Companies Fund. In this episode of Short Briefings on Long Term Thinking, he brings his 23 years of experience in the field to explain what makes the specialism different from other types of growth investing.

He makes the case that finding exceptional growth companies at attractive valuations is only part of the equation. Investors must be mindful of the broader macroeconomic environment, he explains, to avoid getting caught out by currency swings or spiralling debt costs. This leads him to conclude that recent resilience in emerging market economies could point to a favourable outlook for the asset class’s growth stocks.

All this only matters to our portfolios if there are exceptional businesses to invest in, and Sutcliffe argues that the emerging markets are home to an increasing number of world-class companies. They range from the Taiwanese chip maker TSMC to the energy, retail and telecoms conglomerate Reliance Industries.

Resources:

Emerging markets: why bother?

Stock story: Pinduoduo

South-east Asia’s rising export stars

Jio Financial Services

Natura

PDD Holdings

Pinduoduo

Reliance Industries

Temu

TSMC

Gabriel Garcia Marquez: Until August

Timecodes:

00:00    Introduction

01:45    Joining the Emerging Markets Team

03:15    A ‘terrifying’ baptism of fire

05:00    Emerging markets’ ‘dirty little secret’

05:45    Qualifying for emerging markets status

06:45    Higher-calibre companies

08:00    Macroeconomic resilience

09:30    US-China tensions and Russia’s invasion of Ukraine

12:00    Investing in China

13:45    PDD Holding’s Pinduoduo and Temu