The most important distinction in the emerging markets groups is between Latin American and Asia. Asian economies have strong current accounts positions many of them in surpluses, benefit from lower commodity prices, and have displayed strong economic growth. While the Latin American countries the largest of which are Brazil and Mexico are dependent on commodity exports and have weaker national accounts.
The recent run up in shares in China and Hong Kong has further increased the performance differential between Emerging Asia, total Emerging Market Indices and Latin America.. Over the last 3 years Emerging Asia (ticker GMF) has produced a total return of 36.9%, total emerging markets 11.3% and Latin America (ticker ILF) -28%
Graph below shows growth of $100,000
|3 Year Returns Growth of $100,000 Emerging Asia (gold) Overall Emerging Markets (blue) and Latin America (green)|
What about the long term future ? A recent bloomberg article reports on longer term projections for global economic growth. The forecasts see a growing share of global GDP for Asia most notably China and India. Other Asian economies are expected to grow strongly while growth in Latin America will remain slow.