Emerging Markets Undergo Technological Transformation

The latest developments related to emerging markets including stable commodity prices and better corporate earnings have sparked interest amongst stakeholders.

Nevertheless, companies of today’s developing markets are very different from what they were in the past.

Enterprises and corporations have undergone a significant transformation from the often plain-vanilla business models of the past that tended to focus on infrastructure, telecommunications, classic banking models or commodity-related businesses, to a new generation of more innovative companies that are tech-savvy and have higher value-added production processes.

Back in the late 1990s, technology-oriented companies made up only 3% of the emerging market, as represented by the MSCI Emerging Markets (EM) Index. Today, around a quarter of the MSCI EM Index is in the IT sector, which includes hardware, software, components and suppliers.

Much of this activity originates from Asia, similar developments in Latin America, Central and Eastern Europe and even Africa are happening.

On May 25, the MSCI EM Index had a price-to-earnings ratio (P/E) of 15.37 times and a price-to-book value (P/B) of 1.66x, compared with a P/E of 21.53x and a P/B of 2.33x for the MSCI World index.

Read more at The Star.