Investing in emerging markets

Abstract

Emerging markets like India and China have attracted a lot of attention by international investors because of the exceptional returns provided by them in the recent years. The table given below presents data on stock market returns around the world during June-December 2007. As you can see, India has topped the world markets in returns. But is there a free lunch? Are investors better off on a risk-adjusted basis by investing in emerging markets? This chapter provides an overview of risks and return in investing in emerging markets. This chapter has the following objectives: • Provide an overview of characteristics of emerging markets • Provide a rationale for investing internationally • Provide a framework for assessing the risk of investing in emerging markets • Highlight the issues in valuing companies in emerging markets and provide an overview of methods. © 2009 Springer-Verlag Berlin Heidelberg.