The government’s reform agenda and continued opening up of the market to foreigners may continue to drive returns in specific parts of the market. The People’s Bank of China has already surprised the market with its November rate cut, and further stimulus measures appear likely given the economic slowdown.
Events in a number of markets in 2014 reminded investors of the importance of assessing geopolitical risks.
The Crimean/Ukrainian issue has reignited differences between the European Union (EU)/US on one side and Russia on the other. As a consequence of this standoff, the relationship between the West and Russia has reached levels of tension not seen since the end of the Cold War. This has resulted in falling asset prices in Russia and eastern Europe.
In the Middle East, the unexpected strengthening of Isis grabbed headlines. While the world was focusing on pushing back al-Qaeda, Isis was quietly growing stronger militarily.
Containing the spread of Isis and the de-escalation of the Ukrainian/Crimean issue could affect returns positively in the coming year.
Andrew Lister is co-chief investment officer at Advance Emerging Capital
KEY NUMBERS: EM INVESTMENT TRUSTS
15
The combined number of investment trusts that sit in the Association of Investment Companies (AIC) European Emerging Markets, Global Emerging Markets Equities, Country Specialists Latin America and Latin America sectors
6
Number of EM and frontier market trusts with a 10-year track record in the four AIC sectors
12.55%
Twelve-month return of the 15 best-performing EM or frontier market trusts to January 15 2015
