All You Need to Know About Emerging Markets
The following data came from studies done by Vanguard, Credit Suisse and WisdomTree
- At the end of 2013, emerging market stocks had a 12-month dividend yield of 2.7%. There have only been eight calendar years that began with a higher yield and the average return over those eight years was 46%.
- From 2000-2010. The annualized return on the MSCI Emerging Markets index was 10.9%, developed markets did just 1.3%.
- Going back to 1900, three countries are still “emerging” 114 years later: China, Russia and South Africa.
- From 1945-1949, Japanese equities lost almost 98% of their value, in US dollar terms.
- Since 1950, emerging market equities delivered annualized gains of 12.5%, versus 10.8% for developed markets.
- The ratio of emerging/developed market volatility was 1.9 in 1980 and has since fallen to 1.1, in other words emerging market stocks are now just 10% more volatile than developed market stocks.
- The average correlation for the 5 years ending in 1980 between emerging markets and developed markets indices for a U.S. investor was .57, by the end of 2013 that has risen to .88.
- Emerging markets pay around 17% of the global dividend stream.
- One-third of revenues from the MSCI All-Country World Index come from emerging markets, however only ~10% of the index is comprised of emerging market stocks!
- Contrary to popular belief, emerging market crises tend to be less contagious than developed market crises. Correlations shoot higher during crises originating in developed markets but stay at normal levels during emerging market crises.
- Value as a factor has worked better than momentum in emerging markets since 2000.
- Thirty years ago, emerging markets made up 1% of the world equity market cap and 18% of world GDP, today they are ~10% of the investable universe and are 33% of world GDP.
- Emerging markets have ~55% share of the global population.
- Since 1995, share issuance has accounted for the majority of market-cap growth for emerging markets, not price appreciation.
- Cumulative dividend growth for the last 3 years: Developed market- 32.9%; Emerging market- 67.9%.
- From 2001-2012, the global economy almost doubled in size, emerging markets account for roughly 64% of the increase.
Picture by Simon Cunningham