Is globalisation emerging markets' biggest enemy?

Country selection is key

Foreign direct investment in emerging market factories and supply chains, because of their comparative advantage in cheap labour, have created excess capacity, diluting emerging countries' earnings and return on equity, says Sandra Crowl, member of the investment committee at Carmignac Gestion.

It has now been five years since emerging market equities underperformed their developed market counterparts. Globalisation seems to have become emerging countries' biggest enemy. This is the biggest challenge for EMs today, and it is precisely why we have seen local companies, particularly in China, search for better returns by sending their capital abroad. Getting the country selection right is key. In the commodity downturn, Russia and Brazil were among the worst performing equity markets. But it is important to frequently reassess your country selection. Until Mauricio Macri be...