Emerging markets and sustainability – do they go together? The experts at UBS Asset Management advise investors not only to look at the status quo when making ESG investments in emerging markets, but also to always keep an eye on the potential for improvement.
Five sustainable trends in emerging markets
We have identified five trending themes in emerging markets that we believe will provide a long-term boost to the regions. But again, investors should look closely, as there will be both winners and losers among the companies impacted by the trends.
- Digital transformation
Digitization plays a key role for almost all sectors and industries today. Four sectors stand out: Media, Entertainment, Fintech and Robotics. Advancing automation and developments in artificial intelligence are likely to lead these sectors to new market successes. For a deeper dive into the topic, we recommend reading the article “The Lack of Innovative Technology in Europe – a Risk to Our Wealth?”.
- Climate change and the environment
In recent years, many people have become more aware of these issues. In the meantime, investors can also benefit from this, because there are more and more interesting companies on the market that have embraced the topic. In particular, companies that focus on energy efficiency, intelligent mobility or renewable energies appear interesting against this background. After all, companies that specialize in the relevant technologies are likely to continue to grow strongly in the future, as they are not only supported by politicians, but can also operate in a scalable and more cost-effective manner.
In view of the aging population and urbanization, demand for healthcare services is increasing. Supply is adapting accordingly and more and more new and innovative technologies, drugs and therapies are entering the market. The health tech sector is particularly interesting for investors. This sector shows that digitalization can lead to greater efficiency and time savings. It may sound paradoxical, but both pharmaceutical and biotech companies are well positioned to exploit their opportunities arising from the forthcoming changes, despite the risk of falling drug prices.
4. Consumption in emerging markets
The middle class in emerging markets is developing increasingly strong purchasing power. People are spending more on goods, services and luxury items once their basic food and clothing needs are met. Companies in the leisure and entertainment sectors in particular are likely to benefit strongly from changing consumer preferences.
5. Deglobalization and geopolitics
In the wake of the pandemic and the tensions between the USA and China, more and more emerging countries are seeking to achieve greater independence. As a result, national and regional market leaders will establish themselves in the individual countries. In particular, companies with modern production capacities outside China, in Southeast Asia and in Eastern Europe, are likely to gain market share and thus grow at an above-average rate.
Which book will open your eyes
Besides these trends, we live in a world in which innovations develop at breathtaking speed. Building innovation in organizations have never been more important than today. Being an innovative company helps you stand out and attract the right talent. The open source book “How to create innovation“, will provide the optimal knowledge base for this. In it, experts in the field of digitization reveal the bulletproof blueprint that’s proven to deliver. Pre-register now for the download!