Skip to main content
Weekly Market Update

Sector Shifts in Emerging Markets

Discover the dynamic changes in emerging market equities, with AsiaPac’s dominance and sector shifts from industrials to tech and finances.

5 min read
Head of North American Investment Strategy & Research

Insight of the Week

Emerging (EM) and developed equity markets have taken turns as the top performer throughout the past quarter-century. Economic growth within emerging markets tend to be higher than developed markets which is appealing to investors as they hope to capture this within their EM allocation. Over the years, the characteristics of emerging market equities have undergone changes, particularly in terms of geography and sector profiles.

At the beginning of the 2000s, AsiaPac comprised 48% of the index, but has steadily increased to 78% today. This increase came at the expense of Latin American and the Middle East/Africa whose weights were reduced by more than half during the same period. This surge in AsiaPac reflects the economic growth of countries in this region. Further, there has been a considerable shift at the sector level, from production to consumption, with financial, technology, consumer discretionary, and communications sectors displacing, to some extent, materials, staples, and industrials.

As economic growth has translated into increased breadth, depth, and maturity in the EM capital markets, investors now have access to more building blocks than ever before, from indexing, fundamental/quantitative active, to thematic, regional, and country-specific. To know more about key points to consider while creating an effective emerging market equity portfolio, read our latest research piece on Optimizing Your Emerging Markets Equity Portfolio.

More Weekly Market Updates