What is an Emerging Market? Flashcards
Who are the emerging markets?
Brazil, Russia, India, China, South Africa
In between least and advanced markets - developing.
Who are the new frontier economies? (Next 11)
1) Chile
2) Egypt
3) Indonesia
4) Malaysia
5) Mexico
6) Pakistan
7) Peru
8) Philippines
9) South Africa
10) Thailand
11) Turkey
What are the characteristics of the new frontier economies?
- Not as developed as emerging markets
- Between least developed and emerging markets
How do different indices affect market categorisation?
Different indices have different ways of measuring them
BRICS all belong to emerging market regardless of which index you use
What is the definition of an emerging market?
Countries experiencing a transition phase from developing markets to developed markets due to rapid growth and industrialisation
What are the features of an emerging market?
- Started economic reform process aimed at alleviating problems
- Less regulation
E.g poverty, poor infrastructure and over population
How do developed markets differ to developing markets?
- Less time to build a warehouse usually
- Less time to enforce a contract
- Less time to register a property
- Less time to start a business
- Fewer procedures to start up a business
What are the features of well functioning markets?
- Low transaction costs
- More transparent information in the market
- Shorter time period to complete transactions
What challenges are there in EMs?
- Buyers and sellers can not easily or efficiently come together
- Uncertainties, information asymmetry, high transaction cost, relationship-based transaction
Why should we invest in emerging markets? Why do they matter?
- Target markets: large populations
- Manufacturing bases - cost in China pushing bases to South East Asia
- Sourcing destinations - cheap labour
- Builders/acquirers of global brands - Chinese car company acquiring Volvo
- Investors/financiers in the advanced economies
- Influences on the economic and political environment
