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Move over please!
Weekly investor research
06 May 2014
Much attention was paid to the expectation that China will overtake the US as the world’s largest economy this year, but the
bigger story in our view is that Emerging Markets (EM) actually overtook developed economies as the largest share of global
GDP already last year. This is clear from new IMF data released in April. Clearly, both investor perceptions about and allocations
to EM continue to lag far behind EM’s rapid fundamental advances. This is true in both equities and fixed income, but especially
in fixed income, where allocations by many investors lag weighting implied by simple GDP weighting by as much as ten times.
This suggests that EM’s long-term technicals remain extremely strong.