The rapid accumulation of wealth in the emerging markets is changing how money is invested. A number of factors in the developed countries as well are forcing this change, subsequently the fact that advantages of investing in listed equities are being questioned in light of corporate scandals and a perception that the markets may no longer serve the interests of ordinary investors.
The financial assets of investors in emerging economies will rise to as much as 36 percent of the global total by 2020, from about 21 percent today, according to McKinsey Global Institute’s ‘The emerging equity gap: Growth and stability in the new investor landscape‘. However, emerging market investors keep most of their assets in bank deposits, which reflects lower income levels, underdeveloped financial markets, and other barriers to diversification.
This potential equity gap opens up opportunities for alternative markets such as private equity and venture capital. The challenge being, among others, to provide a bridge between investors in developed markets and the emerging markets opportunities – and simultaneously address ordinary investors’ concerns that their interests are no longer served, concerns that are as relevant in emerging markets.
We, ourselves, like to think that this is our sweet spot – to bridge management culture, cash, etc. with the massive venture capital opportunities in emerging markets and vice versa. See more at nblund.com.