If the writers in the post immediately below are anywhere near correct in their assessment of the declining importance of the U.S. dollar in the coming bipolar multi-polar world, the valuation effects on frontier and emerging markets would be a massive re-valuation higher.
With the caveat that those same frontier and emerging markets are notorious for separating investors from their capital in unique and exciting ways,
From the CFA Institute's Enterprising Investor blog, December :
Today’s spiking inflation, rising interest rates, and billion-dollar investment frauds are good reminders that a clear understanding of the past helps us better anticipate the future. Indeed, it can provide a reliable foundation on which we can develop portfolio-allocation decisions.
That’s why we need to have a firm grasp on different equity markets’ past relative and absolute performance. After all, what drives the market cycle if not the relative under- and outperformance of different assets?
With that in mind, the equity market universe is variously categorized by region, country, sector, market capitalization, and style. The well-established geographic segmentation divides the world into frontier, emerging, and developed markets.
What determines a country’s designation? The MSCI Market Classification Framework focuses on three criteria: economic development, size and liquidity, and market accessibility. The latter is a function of three components: openness to foreign ownership, ease of capital inflows and outflows, and the efficiency and stability of the institutional framework.
It hasn’t always been easy or cheap to invest at the regional or country level, but thanks to technological advances and the development of exchange-traded funds (ETFs), retail investors now have much better, if not limitless, access to the various segments of the equity market universe.
So, how have these geographic segments performed relative to one another in recent market cycles?....
....MUCH MORE
Related:
"Why Pakistan's Market Beats China's And India's" which was preceded by:
Karachi Stock Exchange: KSE’s black Monday — heaviest ever single-day decline
The rumours of change at the head of the government spread like wildfire and nervous investors started to throw away shares at ridiculously low prices. When the dust settled at the end of trading day, a cool sum of Rs186 billion ($3.2 billion) had been washed away from the market capitalisation....So, should the KSE Board or the frontline regulator -- the KSE management -- have moved in to calm the investors’ fears. “We cannot be expected to comment on rumours,” says Shaukat Tarin, the chairman of the Board of Directors of KSE, adding: “If we were to do that, we would be doing just that and nothing else”....MORE
Pakistani Investors Stone Karachi Exchange as Stocks Plunge...
Karachi: Trade in shares on Pakistan's main stock exchange ground to a halt on Tuesday as investors lost all interest...
...The Karachi Stock Exchange benchmark 100-share index ended unchanged from Monday at 9,183.14, 39 points above a floor that was imposed on August 28 after sharp losses. No shares listed on the KSE index were traded for the first time ever...Dimensional Fund Advisors Shows How to Bet on Emerging Markets When You're Honest And Admit You Don't Really Know What's Going to Happen
This looks very, very smart.
The approach seems to solve one of the major portfolio construction problems in Emerging/Frontier investing: if you try to control risk by buying market cap you end up owning all the banks and not much else....
"Frontier Markets: Kyrgyzstan Stock Exchange"
And many, many more.
