Investors put faith in emerging markets
London-based investment services firm MCSI has launched an emerging markets index, featuring stocks weighted in emerging economies beyond Brazil, Russia, India and China.
According to the MSCI’s data, the index features over 500 constituents from 17 emerging market countries, with a total market cap of US$1.96 trillion.
The MSCI EM Beyond BRIC Index has outperformed the MSCI Emerging Markets Index since 1999 (12.0% gross annualized return in USD vs 11.1%), the firm said.
Since 2007, the MSCI EM Beyond BRIC Index has had a positive annualized performance of 2.83%, while the MSCI Emerging Markets Index had a negative performance of 2.1%.
The MSCI EM Beyond BRIC Index, is a subset of the investment firm’s typical Emerging Markets Index, and comprises 17 countries, excluding the BRIC nations.
Of the 17 emerging markets, South Africa, Taiwan, Korea and Mexico make up the bulk of the stocks, making up almost 60% of the index’s held stock, with South Africa’s making up the biggest percentage at 15.78%.
However, the weights of larger Emerging Market countries such as SA, Taiwan and Korea are capped on a quarterly basis at 15% in the index, giving greater prominence to smaller Emerging Market countries like Thailand, Malaysia and Indonesia.
Big South African companies tracked in the index include Naspers, MTN Group and Sasol – while South Korean electronics giant, Samsung, is also listed.
“The BRIC countries have been recognized over the past few years as key drivers of economic growth within the Emerging Markets and many institutional investors already have exposure to those countries within their portfolios,” said Deborah Yang, Managing Director and Head of the MSCI Index Business in Europe, the Middle East, Africa and India.
“We have launched the MSCI EM Beyond BRIC Index in response to client demand,” she said.
Previous research done by Ernst and Young, which surveyed 5000 investors, found that 41 percent of respondents chose South Africa as the first choice of destination.
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