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Emerging market exposure without investing directly in emerging markets

Multi-national corporations from developed countries increasingly seek to leverage growth opportunities in emerging markets

While there is no consensus as to whether developed markets stocks can offer sufficient emerging markets exposure, investors – especially those who see emerging markets as being too risky – can take comfort in the fact that they can benefit from the growth in these markets through indirect exposure.

Incidentally, emerging markets are on average growing significantly faster than developed markets, with 66% of the world’s growth in 2015 expected to come from emerging markets, according to the International Monetary Fund’s World Economic Outlook.

As a result, “a growing number of MNCs which have operations in emerging markets are deriving a significant portion of their revenues and profits from these markets,” says David Kunselman, senior portfolio manager with Excel Investment Counsel Inc. in Mississauga.

According to a 2013 survey of MNC executives conducted by the Boston Consulting Group, more than three-quarters of multinational companies expect to gain market share in emerging markets, although some believe they have not cracked the code to succeed against local competition.


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