Emerging Equity Markets in a Globalized World

46 Pages Posted: 26 Oct 2013 Last revised: 13 Apr 2023

See all articles by Geert Bekaert

Geert Bekaert

Columbia University - Columbia Business School, Finance

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER)

Tomas Mondino

Columbia University

Multiple version iconThere are 2 versions of this paper

Date Written: April 12, 2023

Abstract

Does the globalization process of the past 25 years obviate the need to segregate global equities into developed and emerging market buckets? We argue the answer is no. Emerging equity markets differ in a statistically significant fashion from developed markets, featuring much lower levels of GDP per capita and equity integration. They also have significantly lower stock market development levels and, on average, feature lower valuation ratios. Emerging markets have morphed into high-beta investments that are highly correlated with developed markets. The historical performance of emerging market investing is much improved by replacing value-weighted indices with alternative weighting schemes, including equal weights, valuation-based weights, and GDP weights.

Keywords: Emerging markets, GDP weights, Market integration, Market segmentation, Illiquidity, Liquidity, Portfolio risk, Portfolio correlation, Market capitalization, Risk characteristics, Cross-sectional volatility, Valuation ratios, Asset class

JEL Classification: G11, G15, G18, G24, F36

Suggested Citation

Bekaert, Geert and Harvey, Campbell R. and Mondino, Tomas, Emerging Equity Markets in a Globalized World (April 12, 2023). Available at SSRN: https://ssrn.com/abstract=2344817 or http://dx.doi.org/10.2139/ssrn.2344817

Geert Bekaert

Columbia University - Columbia Business School, Finance ( email )

NY
United States

Campbell R. Harvey (Contact Author)

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)

HOME PAGE: http://www.duke.edu/~charvey

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Tomas Mondino

Columbia University

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