The Capital Cycle Podcast Fishing in Uncrowded Waters
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Dec 20, 2024 Laura Fyfe, an emerging markets analyst at Marathon Asset Management, dives into the potential of smaller capitalization investments that are currently overlooked. She shares insights on how market concentration favors a few major players while revealing lucrative opportunities in countries like South Africa and Mexico. Fyfe discusses lesser-known companies like AVI and Gruma, highlighting their strong governance and growth potential. The conversation emphasizes the value of exploring undervalued markets as alternative investment avenues, contrasting them with more saturated regions.
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Emerging Markets Out of Favor
- Emerging markets have been out of favor with investors for 10-15 years.
- This is partly due to China's investment boom and bust and the commodities cycle.
Concentration in Emerging Markets
- Emerging markets, like the US, are highly concentrated.
- Investors often overlook this concentration, focusing on US market returns.
Geographic and Market Cap Concentration
- 75% of the emerging market index value comes from just four Asian countries: Taiwan, China, India, and Korea.
- The top 10 emerging market companies make up 26% of the index, similar to 2020 levels.