Hermes' Greenberg: The headwinds and tailwinds for emerging markets

Traditional drivers are being increasingly challenged by global headwinds and investors must adapt, writes Gary Greenberg, head of emerging markets at Hermes Investment Management.

For many years, urbanisation and industrialisation have been trumpeted as the tailwinds for the world's emerging market (EM) economies. However, these traditional drivers are being increasingly challenged by global headwinds – namely demographics and technology. Is now the time to increase EM exposure? Much of the world's purchasing power – the US, Europe, Japan and China – is greying, which has implications for EMs, long seen as the 'factory of the world'. This slowdown in exports and producer prices has now moved from the developed markets to China's suppliers – in places such as Br...