Emerging Equity Markets in a Globalizing World

29 Pages Posted: 8 Jul 2014

See all articles by Geert Bekaert

Geert Bekaert

Columbia Business School - Finance and Economics

Campbell R. Harvey

Duke University - Fuqua School of Business; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Multiple version iconThere are 2 versions of this paper

Date Written: May 20, 2014

Abstract

Given the dramatic globalization over the past twenty years, does it make sense to segregate global equities into “developed” and “emerging” market buckets? We argue that the answer is still yes. While correlations between developed and emerging markets have increased, the process of integration of these markets into world markets is incomplete. To some degree, this accounts for the disparity between emerging equity market capitalization in investable world equity market benchmarks versus emerging market economies in the world economy. Currently, emerging markets account for more than 30% of world GDP. However, they only account for 12.6% of world equity capitalization. This incomplete integration along with the relatively small equity market capitalization should be taken into account in portfolio allocation. Other asset classes within emerging markets (such as corporate bonds and currencies) are also viable.

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

Suggested Citation

Bekaert, Geert and Harvey, Campbell R., Emerging Equity Markets in a Globalizing World (May 20, 2014). Netspar Discussion Paper No. 05/2014-024. Available at SSRN: https://ssrn.com/abstract=2463053 or http://dx.doi.org/10.2139/ssrn.2463053

Geert Bekaert (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Campbell R. Harvey

Duke University - Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States
919-660-7768 (Phone)
919-660-8030 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

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