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Emerging equity markets in a globalized world

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  • Bekaert, Geert
  • Harvey, Campbell R.
  • Mondino, Tomas

Abstract

Does the globalization process of the past 25 years obviate the need to segregate global equities into developed and emerging market buckets? We argue the answer is no. Emerging equity markets differ in a statistically significant fashion from developed markets, featuring much lower levels of GDP per capita and equity integration. They also have significantly lower stock market development levels and, on average, feature lower valuation ratios. Emerging markets have morphed into high-beta investments that are highly correlated with developed markets. The historical performance of emerging market investing is much improved by replacing value-weighted indices with alternative weighting schemes, including equal weights, valuation-based weights, and GDP weights.

Suggested Citation

  • Bekaert, Geert & Harvey, Campbell R. & Mondino, Tomas, 2023. "Emerging equity markets in a globalized world," Emerging Markets Review, Elsevier, vol. 56(C).
    • Handle: RePEc:eee:ememar:v:56:y:2023:i:c:s1566014123000390
    DOI: 10.1016/j.ememar.2023.101034
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    References listed on IDEAS

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    More about this item

    Keywords

    Emerging markets; Valuation; Market integration; Asset class; Diversification; Correlation dynamics;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration

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