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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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.
Sector Concentration
- Technology dominates the emerging markets index, similar to the world index.
- The top 5 tech-related companies in emerging markets hold a higher share (21%) of their index than the top 5 in the world index (18%).
Fishing in Uncrowded Waters
- Look beyond large-cap tech stocks in Asia within emerging markets.
- Consider smaller companies in more diverse sectors and regions like South Africa and Mexico.