Please see below article received from EPIC Investment Partners this morning, which provides an update on emerging markets.
Investors are increasingly questioning whether ‘emerging markets’ should continue to be treated as an asset class. The term was coined by the World Bank back in 1981 as a more polite, or modern, term than The Third World.
From distant memory a country needed a per capita income below $10,000 to be considered emerging. Later frontier markets were identified, defined loosely as ‘generally smaller, less liquid, and less accessible than emerging markets.’
The question is whether it is appropriate to lump, say, Chile with Egypt or the UAE with Thailand or Vietnam with Argentina. The bland traditional definition seems outdated and arguably not fit for purpose. Greece was infamously downgraded to emerging market status in 2013.
Taiwan’s nominal GDP per capita for 2024 was $34,000 while GDP per capita in Purchasing Power Parity (PPP) terms is estimated to be around $82,600. Why is Taiwan still an emerging market? The only reasonable excuse is that foreign investors need to register and obtain a licence to trade local stocks.
The same applies to South Kora where GDP per capital is $36,000 while GDP per capita in PPP terms is estimated to be around $63,000. China remains an emerging market although nominal and PPP GDP per capita income stand at $13,000 and $25,000 respectively. The numbers for India are $2,700 and $12,100.
Local licences are required for all four markets.
The largest five markets in the MSCI Emerging Market Index are as follows: China 31.2%, Taiwan 19.4%, India 15.2%, South Korea 11.0%, and Brazil, 4.3%. Total 81.1%. Only Brazil and India more or less qualify within the traditional GDP per capita definition.
As investors, we are happy to run with the Asia ex Japan asset class which is also dominated by the four markets listed above.
Unfortunately, the markets across ASEAN (The Association of South East Asian Nations) have a tiny index weight – less than 1.5% each (with the notable exception of Singapore). These markets are not uninvestible by any means but passively managed products have little incentive to invest in the region.
Please check in again with us soon for further relevant content and market news.
Chloe
23/10/2025