Post liberalization --------------------------------------------------- Cap flows: increase, but less volatile then in Dev markets Consumption: decreased volatility Correlations: slightly higher correlations Cost of capital - decrease (because of capital flows, diversification, improved corp governance, reduced political risk) Common problems for EM ------------------------------- corruption weak education high political risk bad infrastructure Barriers of investing in EM ----------------------------------- Political risk, Transaction costs, Liquidity risk, Home bias Elements of growth for EM ------------------------------------ Technology, cap investments, employment Key to growth ---------------------- Opennes (reduce capital restriction) Sound fiscal/monetary policy Education Infrastructural integrity (investments in roads/hospitals)
can some one please review? I hate emerging market section, information is so vague
i don’t have the books in front of me, but one thing comes to mind for barrers to investing: capital restrictions. - some EMs have a set rate of capital repatriation, making it hard to get your capital out - income and dividends may be held up in the country for a substantial period of time, resulting in a “holding drag” on the portfolio’s performance before they are returned to the investor and can be reinvested - sometimes there are restrictions related to the % of a stock that foreign ownership can control (e.g., 10% of float may be owned by foreign investors). i hope that helps.
Thanks!