Emerging market exchanges and the rise of retail investing

The past quarter saw significant attention drawn to retail investors in the developed world and how their coordinated activities resulted in wild swings in the prices of heavily shorted shares.

In emerging markets, we haven't experienced anything quite so exciting. However, the long-term trend of greater retail participation in several countries off a very low base is something we have high­lighted before. We like the business models of securities exchanges as they tend to dominate trade in their local markets and are akin to a local monopoly. If run correctly, they can build signif­icant moats around their respective businesses and earn very high returns on capital, while gener­ating cash that is distributed to shareholders. In this article, we highlight a few emerging market ...