Evaluating Emerging Market Stocks through a Governance Lens (MSCI)

Historically, emerging-market stocks are perceived to have lower governance standards than their developed-market counterparts. They are frequently less transparent, requiring investors to dig deep for relevant data. Some emerging-market companies also may disadvantage minority shareholders, particularly those firms dominated by controlling shareholders and those that are state-owned enterprises (SOEs). How can institutional investors address these issues?

We have previously discussed how active equity managers can integrate environmental, social and governance (ESG) data and ratings into the investment process for developed-market portfolios. Now, we extend this approach to emerging-market portfolios, particularly focusing on governance issues. It’s not easy, as some companies may not make detailed company-level information readily accessible to all investors. Some elements for integration may include shareholder-manager alignment, voting rights, compensation incentives and accuracy of financial statements. READ MORE

Similar Posts:

• Investing in Emerging and Frontier Markets: An Investor Viewpoint (World Federation of Exchanges)
• Why the MSCI Emerging Markets Index Has Some BIG Problems (WSJ)
• Optimizing Exposure to the Emerging Market Rebalance (KraneShares)
• What Does it Take to be an Emerging Markets Investor? G&M
• Tech and the Consumer have Reshaped Today’s Emerging Markets (Manulife IM)
• Emerging Markets: How to Unlock the Next Wave of Returns (Amundi Asset Management)
• Rplan Survey: Investors Have Been “Taken In” by Emerging Market Hype
• India to Offer More Investment Options Through ADRs (The Asset)
• BRICS May Set Up Emerging Markets Ratings Agency (Economic Times)
• What is the SEC Targeting Alibaba (BABA) About? (China Accounting Blog)
• Corporate Governance in Emerging Markets: Progress and Opportunity (Franklin Templeton)
• Emerging Market Investing: Remember Demographics and Take a Selective Approach (ThinkAdvisor)
• Terry Smith: Emerging Markets to Outperform Over the Long-term But Brace for Volatility (FE Trustnet)
• Chinese Tech Stocks Down But Not Out As Sentiment Shifts (FA)
• Money Rushing Into the US Will Reverse (Moneyweb.co.za)