Nov 2, 2021
This is one of the most famous quotes in finance, yet the less familiar and rather more uncomfortable rest of this refrain is: “… even if it is your own”. As EM investors, many of us will currently identify more closely with the latter sentiment – and there may be more volatility to come before markets settle. However, as we are now seeing words like “uninvestable” applied to parts of the asset class, we think it is worth revisiting the outlook for EMs.
All investments carry the risk of capital loss.
Specific risks. Currency exchange: Changes in the relative values of different currencies may adversely affect the value of investments and any related income. Derivatives: The use of derivatives is not intended to increase the overall level of risk. However, the use of derivatives may still lead to large changes in value and includes the potential for large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss. Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. insolvency), the owners of their equity rank last in terms of any financial payment from that company. Emerging market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.