It is hard enough to find investments that can provide capital gains, let alone on a continuous basis, as a growing base of capital continues to chase after limited resources, compressing future expected returns. Although this is an observation that can be generalized, there is growing evidence that emerging economies are in a far more attractive situation both structurally and politically. As property rights in developing nations continue to evolve, so does the wealth and sophistication of its inhabitants which reinforces the economic strength of the countries involved. The future world engine of growth or demand is increasingly coming from emerging economies, in stark contrast to the past when most if not all demand came from western nations. Probably the most damning evidence in favor of emerging markets comes from recent trends in debt to GDP. The graph above says it all, the level of debt in developed markets have exploded. If we combine this with the increasingly ageing populations of the countries involved, the future doesn't bode well at all for developed markets.
