“Emerging market (EM) equities has a history of headlines — mostly negative — and volatility,” said Devan Kaloo, Head of Global Emerging Markets Equities at Aberdeen Asset Management. Yet there is reason for optimism, Kaloo assured attendees of the 70th CFA Institute Annual Conference, especially for those value investors who dive deeply into the fundamentals, which may be turning positive.
One primary reason for greater volatility in EM equities is less liquidity. Free float on the average EM company is only 30% whereas it is closer to 70% for companies in developed markets. “If you have a dollar to buy Exxon at 100% float, it has a different effect than buying a dollar of PetroChina with its 25% float,” said Kaloo. This fact can move markets. Read More