The Changing Nature of Emerging Markets Kim Catechis ... Ma… · Ericsson Mobility report,...
Transcript of The Changing Nature of Emerging Markets Kim Catechis ... Ma… · Ericsson Mobility report,...
The Changing Nature of Emerging Markets
Kim CatechisGlobal Emerging Markets
April 2019
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Important information
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Risks
All investments are subject to risk including the loss of principal. The views expressed in this presentation reflect those of the portfolio manager as of the dateof this presentation. Any such views are subject to change at any time based on market or other conditions. These views may not be relied upon as investmentadvice and, because investment decisions for the fund is based on numerous factors, may not be relied upon as an indication of trading intent on behalf of thefund. Neither the information, nor any opinion expressed, constitutes a solicitation or recommendation by us of the purchase or sale of any securities orinvestment.
It is not possible to invest directly in an index.
Distributed by Legg Mason Investor Services, LLC. Legg Mason Investor Services, LLC is a subsidiary of Legg Mason, Inc.
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Attractive market valuations
Past performance is not a guide to future returns. Source: Bloomberg as at 31 December 2018.
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Price to Book Return on Equity
2,1
1,5
1,0
1,5
2,0
2,5
3,0
PB R
atio
MSCI World Index
MSCI Emerging Markets Index
13,2
13,2
2
4
6
8
10
12
14
16
RO
E
MSCI World Index
MSCI Emerging Markets Index
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The changing nature of emerging markets
Source: Factset and Martin Currie. 2008 sector exposure is as at 1 January 2008. 2018 data is accurate as at 31 December 2018. Other includes Industrials, Utilities, Healthcare and Real Estate.
MSCI Emerging Markets Index Sector Exposure
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18%
15%
12%10%
22%
9%
15%
8% 8%
14% 14%
25%
17%
14%
Energy Materials CommunicationServices
InformationTechnology
Financials Consumer Other
2008 2018
2008 2018
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3.492
733
497
354
335
1.380
724
306
335
285
Asia Pacific
Europe
Middle East and Africa
North America
Central and South America
Long-term driver: the rise of the middle class
Source: Statista and Brookings Institute. *Middle class = households with incomes between $11 and $110 per person per day in 2011 Purchasing Power Parity terms.
Number of global middle class* by region (millions)
5
46%
24%
10%
11%9%
64%14%
9%7%6%
Share of global middle class by region
2015
2030
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Long-term driver: consumer spending accelerated by technology
Source: Statista and EY, ‘FinTech Adoption Rates’, June 2017. *Hong Kong is a special administrative region of the people’s republic of China.
Share of digitally active population using the following Fintech services by country (2017)
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57%
59%
60%
72%
83%
UK
Australia
Brazil
India
China
13%
15%
20%
21%
22%
HongKong
US
India
Brazil
China
25%
27%
29%
39%
58%
HongKong
US
Brazil
India
China
12%
13%
15%
20%
46%
Germany
US
Brazil
India
China
31%
32%
38%
43%
47%
Germany
South Africa
China
UK
India
Money transfer & payments
Financial planning
Savings & investments
Borrowing Insurance
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The confluence of technology and geopolitics
Source: Statista - ‘Global 5G Adoption to Take Off in 2021’. Ericsson Mobility report, forecast as of November 2018. All forecasts are expressions of opinion and are subject to change without notice and are not intended to be a guarantee of future events.
Forecast of 5G smartphone subscriptions by region
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0
300
600
900
1.200
1.500
2019 2020 2021 2022 2023 2024Fore
cast
of 5
G s
mar
tpho
ne s
ubsc
riptio
ns b
y re
gion
Asia-Pacific
North America
Western Europe
Central & Eastern Europe
Latin America
Middle East & Africa
4m54m
191m
551m
1,031m
1,479m
2.2m Asia-Pacific
1.5m North America
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Digitisation – a long way to grow
Source: Statista Digital Market Outlook, ‘China’s Vast Digital Potential’, May 2017. Online vs offline population in china compared to the United States in 2016.
Online vs offline population in China compared to the United States
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Trade alliancesThe new battleground
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U.S. – MEXICO – CANADA AGREEMENT
(THE NEW NAFTA)
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One belt, one roadChina’s soft power strategy
Source: Martin Currie. This is an approximation of the locations of Chinese global ports. The information presented has been compiled with considerable care to ensure its accuracy. But no representation or warranty, express or implied, is made to its accuracy or completeness.
68 nations, USD2 – 3 trillion of investment
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Chinese-owned global ports
Panama canal
Strait of Gibraltar
Suez canal
Bab-al-Mandab Strait
Strait of Hormuz
Strait of Malacca
Strait of Sunda
Maritime chokepoint
Chinese global port
Source: Martin Currie. This is an approximation of the locations of Chinese global ports. The information presented has been compiled with considerable care to ensure its accuracy. But no representation or warranty, express or implied, is made to its accuracy or completeness.
Djibouti
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