14 Pages Posted: 13 May 2004
Should investors in emerging markets focus on diversifying across countries or diversifying across industries? This question, widely debated in developed markets, and particularly in Europe, has received little attention in emerging markets. Using a normative approach that disentangles the impact of investor behavior from the opportunities offered by capital markets, we find that country effects dominate industry effects. It follows from our results that, despite the increasing globalization of emerging markets, investors should focus their diversification efforts on countries rather than on industries.
Suggested Citation: Suggested Citation
Estrada, Javier and Kritzman, Mark and Page, Sebastien, Countries versus Industries in Emerging Markets: A Normative Portfolio Approach. EFMA 2004 Basel Meetings Paper. Available at SSRN: https://ssrn.com/abstract=500048 or http://dx.doi.org/10.2139/ssrn.500048