Well, not in the long-run, no. You would be hard pressed to find an economist, investor or even politician who does not reckon the global shift in growth to Asia and Latin America is going to be the story of the coming decade, century etc.
But in the shorter term, strange things are happening. MSCI’s benchmark emerging market stock index is barely in the black for the year. Even more surprising is that it is underperforming its developed market counterpart.
Many economists and investment strategists are still beating the drum for emerging markets and a Reuters European Funds Summit in Luxembourg this week heard numerous cases of retail investors beginning to move into the sector, joining their institutional brethren.
The problem is that all this demand can transform itself into too much money chasing too few assets. LGT Capital Management insists that we are not there yet, but used the “bubble” word during a meeting with Reuters reporters at the summit.
Again, no one is moving away from the story of emerging markets as a long-term growth theme — indeed demand for emerging debt is holding up well. But the doubling of the MSCI stock index during last year’s rally, plus general volatility and global economic uncertainty, might mean the sheen is off for a bit.