Emerging Market Investment Opportunities

Based on a recent study by S&P Global, emerging markets will play a crucial role in shaping the global economy, contributing about 65% of global economic growth by 2035. While being present in well-established markets across the world is rewarding, it is equally important for businesses to invest in emerging markets, as they offer significant growth potential thanks to a rapid economic development, a rising middle class, and an evolving consumer behaviour influenced by a huge use of digital solutions. To succeed, businesses should tailer their operations, services, or products to match with local consumer habits. Affordability is crucial, as many consumers in emerging markets have lower purchasing power, so offering cost-effective solutions can help businesses reach a wider audience. Forming local partnerships can also provide valuable market insights, easing entry and building long-term trust. While emerging markets offer plenty of opportunities, risks such as currency fluctuations, and regulatory changes must be carefully and proactively managed. By staying proactive and investing in local expertise, businesses can successfully navigate these challenges and focus on the growth potential of emerging markets. #CEO #Leadership #business #Emergingmarkets #BFLGroup

Everyone thinks EM resilience is a tech story. But that misses the bigger picture There’s been a lot of debate about EM stock index concentration lately #EmergingMarkets have held up remarkably well through the oil shock, outperforming the Q1 2022 episode, and versus typical risk‑off periods. Now the debate has swung to index concentration: if the EM index is dominated by chipmakers, has it lost its diversification appeal for investors? Not quite 1️⃣ Valuations. EM still trades at around 12x forward earnings, a 40% discount to the US. In the 2000s BRICS era, EM traded at a PE premium. Valuation regimes are cyclical, not structural 2️⃣ Positioning. EM is just 13% of global market cap. The US is 61% , far above its 25% share of global GDP. And EM tech is <3% of global indices versus 23% for US tech. Investors are strategically under‑allocated to EM 3️⃣ The dollar. The 2010s were a decade of dollar strength. The 2020s increasingly look like the opposite. A multi-year “dollar down” regime oxygenates EM returns in a way that’s easy to underestimate (see chart) Yes, tech concentration in the index matters. But EM’s story is bigger: valuations, positioning, and a shifting currency regime. That’s where the diversification lives now.

Solar is starting to boom across Africa — and nowhere is it more visible than in Nigeria, the continent’s largest petrostate. Nigeria is Africa's largest oil-producing nation. However, this wealth has not been translated into reliable power due to chronically poor infrastructure, corruption and vandalism of oil and gas lines. Outages are frequent and often last for hours. Around 85 million Nigerians – over one third of the population – have no grid connection at all. Most households and businesses have relied on diesel generators for years to fill the gap. Two things have abruptly changed all that: 1️⃣ The availability of ever cheaper Chinese solar panels and batteries. 2️⃣ The removal of a government fuel subsidy that lowered the cost of running a generator. Suddenly, solar is surging across the country. Nigeria is now Africa's second biggest importer of Chinese solar panels (after South Africa). The country imported 1.7 GW in the last year alone, more than triple the imports of just two years ago. For those who can afford panels, payback times are less than six months. For those who can't, plugging into one of the country's interconnected minigrids is the next best option. These local networks of solar panels and batteries deliver constant power — three times cheaper than diesel and far more reliable than the grid. Developers already serve tens of thousands of customers, with 20 GW of systems expected by 2033 — compared with just 4.5 GW the national grid manages today. This is grassroots energy transition in action — driven by necessity, not policy. It’s happening all over Africa: communities powering themselves when the grid can’t. And once the sun comes up on this kind of change, there’s no going back. ☀️ #energy #renewables #energytransition

I am very happy to share insights from my recent op-ed in the Financial Times. Emerging markets have often been viewed as risky, but new data from the Global Emerging Markets Risk Database Consortium paints a different picture. With comparable default rates and superior recovery rates, investing in emerging markets offers resilience and potential. The statistics, spanning 30 years of lending, show that the risks in emerging markets compare favorably with other asset classes. Additionally, the portfolio diversification they offer proves beneficial during global stress periods. As a co-founder and major contributor to GEMs, IFC is committed to providing crucial data to help investors make informed decisions about emerging markets. Reallocating just 1% of global assets each year could significantly impact growth and development in these countries. Read more: http://wrld.bg/PWRb50Ro0tq The World Bank IFC - International Finance Corporation

A new global arms race is underway — and it’s getting costly. The demand for weapons in the Russia-Ukraine war is claiming a lot of the world’s capacity, even as the U.S. pulls back. The commitment by many Western countries, including Canada, to big increases in their defence budgets will only add to that demand. By one estimate, there could soon be another $1.9 trillion budgeted in the coming years for defence spending — and that’s just in the West. Where will all that money come from? And who will produce all the equipment, technology and weapons it will go shopping for? To bridge the gap, a lot of companies and public sector enterprises will need a new generation of capital to scale their innovation labs and production lines, and tackle new markets. It’s about much more than procurement and order books. The new defence and security sector will need new forms of capital, from venture to long-term equity. I’m in London and met today with a group of bankers, defence leaders and government officials to discuss a novel approach called the Defence, Security and Resilience Bank, a British-inspired idea that would pool capital from member countries. Those countries could then each borrow from the bank to finance expanded defence budgets, especially if their own borrowing costs in the open market are going up. Another novelty: This new form of multilateral bank could support guarantees for banks to lend to defence and security companies, making them much less risky. Here’s one of the challenges: The defence sector is made up of large multinational companies, which have a straight line to capital, and a vast array of smaller suppliers that don’t. Those small and medium sized enterprises, including a lot of Canadians, could soon see a massive increase in orders that they may not be ready for. That’s why many will need new equity investors or venture backers, depending on their size, to quickly expand. It’s not just defence firms. Lots of dual use security companies will be in the mix, too. Think of cyber, sonar and space, even health. An added challenge: many financial institutions, including government agencies, have shied away from defence companies, especially if they make lethal weapons. A new playbook may be needed, including definitions for security and defence. Eighty years ago this fall, the United Nations was created to help protect the world against major wars, largely through the rule of law, global standards and investments ion peacekeeping and human development. Now the focus is on deterrence. Starting in the 1940s, the UN approach used multilateral finance — think of the World Bank — to keep the world together. Can a similar approach to defence and security work? If it does, it may need to serve its own “dual purpose” — buzzwords of the season — to both deter conflict through strength while promoting peace through prosperity. RBC Thought Leadership

Are we seeing the early stages of a mining supercycle? ⛏️ Capital is flowing into mining and metals at the fastest pace in years, fueled by AI infrastructure, defence spending, and a growing shift away from high-valuation tech. Some key signals: ▶️Mining ETF assets surged from $37B to $87.4B in just one year ▶️$8.24B flowed into mining in Q1 alone, a dramatic reversal from 2025 outflows ▶️Hard assets (including oil, gas, and agriculture) are seeing one of the sharpest rotations in history As BlackRock’s Evy H. puts it, this may be “the early stages of a commodity supercycle.” "The material intensity of GDP is rising," according to Hambro, driven by massive investment in data centres, grid infrastructure, EVs, and electrification. Unlike past cycles, this demand is structurally broader and "much more robust and resilient," spanning AI, energy security, and defence. But this isn’t a smooth ride. Metals markets are relatively small, meaning inflows can amplify volatility. Bottlenecks in mining, refining, and transport could trigger sharp price swings even within a long-term uptrend. We’re already seeing divergence: Copper attracting fresh inflows whilst gold is experiencing profit-taking despite geopolitical tension. And there’s a striking asymmetry: Mining stocks are just 0.4% of global equities, compared to top tech’s 16.8% share. Valuations remain compressed too, at 7–8x EV/EBITDA vs. ~14x in the last boom. The conviction from investors is building: "Copper is at the intersection of everything and critically undersupplied. There is no doubt in my mind that copper prices could double or triple over the next decade ⁠and owning copper producers will deliver multiples of the spot price growth” says Charlie Aitken, group investment director at Australia's Regal Partners. If this supercycle thesis holds, many investors will be exposed for being significantly underexposed the mining sector. Based on reporting by Clara Denina, Pratima Desai and Melanie Burton (Reuters). (+++Opinions are my own. Not investment advice. Do your own research.+++) 👋 Follow for calm thinking in noisy markets, and Friday Funnies when we’ve earned them. Calm is a strategy.

EU arms firms' shares skyrocket, sovereign bonds rise — here's why. My latest for EUobserver European defence companies have significantly outperformed their US counterparts since the start of the war in Ukraine. The most striking cases are Rheinmetall (Germany) and Leonardo (Italy). There is an expectation that increased defence spending in the EU will boost GDP. But we should not celebrate too soon. 1️⃣Beyond financial resources, achieving meaningful improvements in military capabilities will require time and political alignment. Decades of defence underspending in🇪🇺have weakened its military-industrial base. The fragmentation of demand has resulted in a dispersed and a not fully interoperable industrial landscape. 2️⃣Between 2019 and 2023, 🇪🇺sourced more than 50% of its military equipment from🇺🇸. This is due to: 🇺🇸develops some of the most advanced military technology in the world 🇺🇸equipment is often more cost-effective due to economies of scale. Increased military spending will not only benefit the European defence industry but also🇺🇸. 3️⃣Unlike other investments, where most funding will need to come from the private sector, defence investments will be predominantly financed by the public sector. This explains the sharp rise in sovereign bond yields last week. The European Commission has responded by announcing a relaxation of EU fiscal rules and up to €150 billion in loans to support new defence investments. However, such an approach primarily benefits Germany (probably a reason for the sharp increase in the stock price of Rheinmetall), whereas greater spending is also required from other large but highly indebted countries such as France, Italy, and Spain. 4️⃣While the 2% of GDP military spending target is the most well-known, there is another equally important target: at least 20% of total defence expenditure must be allocated to equipment. Some countries, like Greece, report high military spending as a% of GDP, yet historically, a large proportion of these funds has been directed towards wages and pensions. 5️⃣Not all EU Member States perceive the need to increase defence spending with the same urgency and will probably have other spending priorities. But if the EU wants to step up its defence capabilities, what matters is that the largest Member States meet the targets. Thus, EU Member States should adhere to a number of key principles: 1️⃣Demand should be consolidated to strengthen the sector. 2️⃣It must be acknowledged that dependence on the US defence industry will persist for some years in certain categories of equipment. 3️⃣Funding should not be managed at Member State level. It should be done at EU and take the form of transfers rather than loans. 4️⃣Spending should prioritise equipment. 5️⃣Member States geographically distant from the conflict must recognise that Russia’s influence extends far beyond its immediate neighbours. Link:https://lnkd.in/dqpvtGHb

The gap between G20 economies is widening—but many global strategies still assume a level of synchronization that no longer exists. The reality is growth is concentrating in emerging markets, while several developed economies—facing aging populations, industrial pressure, and structural rigidity—are settling into prolonged slow-growth cycles. This isn’t temporary divergence. It’s a reset where economic expansion actually happens.    What’s changing faster than most expect is the gap between that reality and how companies continue to operate. Cost structures, sourcing strategies, and manufacturing footprints built for stable, low-growth environments are now being applied to markets defined by speed, scale, and volatility. The consequences are already visible—margin pressure, supply chain strain, missed growth.    Operational flexibility is no longer an advantage. It’s becoming a baseline requirement. The real issue is whether resources are being reallocated in line with this shift—or whether organizations are still optimizing a version of the global economy that no longer exists.

The biggest mistake investors make? Treating Africa like a country instead of 54 distinct markets. Afridigest’s latest map shows a clear divide: countries with massive Economic Potential (bottom-right) vs. those with actual Investment Attractiveness (top-right). But the UK-India-Africa Investment Corridor is currently building the bridge to close that gap. Here’s how the landscape is shifting in 2026:  ➡️ Nigeria’s Efficiency Play 🇳🇬: The massive £746M UKEF-backed port deal isn't just about ships; it’s about moving Nigeria up the Y-axis by slashing the logistics tax that kills PE exits. ➡️ Uganda’s Value Jump 🇺🇬: Already high on Investment Attractiveness, Uganda is the "darling" of the new UK-India trilateral. With UK FDI stock in-country jumping nearly 90%, we’re seeing a shift from raw exports to high-value pharma and agro-processing. ➡️ The Ghana/West Africa Halo 🇬🇭: Total trade with Ghana has hit £1.5B, but the real story is the UK–West Africa Digital Corridor. It’s tackling the $7B trade finance gap, making the "Emerging 9" much safer for institutional capital. The "Sleeping Giants" like Ethiopia and Tanzania (bottom-right) are the real targets for 2027. As the UK ramps up regional export finance capacity to £3B+, we’re moving away from speculative growth toward operational efficiency. Which of the Emerging 9 do you think breaks into the Top Tier 6 first? 

New report on Blended Finance from UNDP proposes a framework to tackle the $2.5 trillion annual SDG investment gap in South and Southeast Asia     Investment needs for climate mitigation and adaptation, urban services, and human development cannot be financed through public budgets alone. However, private capital flows are constrained by structural risks, market failures, and gaps in policy, regulatory, and institutional systems.     The report finds:     💸 It’s about more than just deal structures, the financing gap is systemic not transactional    ⚠️ Blended finance remains too transaction-focused not geared toward long-lasting market transformation    🏗️ Governments play two complementary roles: referees (setting rules, reducing information asymmetries, improving coordination) and players (deploying concessional capital, absorbing risk, anchoring early-stage markets)    🌍 The Framework's six interdependent pillars give governments a structured way to diagnose barriers, prioritize reforms, and sequence actions based on their specific context and institutional capacity: national-level planning, policy and regulatory environment, supply and deployment of concessional capital, market development and private sector mobilization, project pipeline development and standardization, information architecture.      My take:    This framework is applicable beyond South and Southeast Asia. Earlier this year, I wrote about key trends in transition finance and the need for it to reach emerging markets outside China as less than a quarter of global transition finance currently does. This framework creates the enabling environment for blended finance to reach further, and to do so more sustainably.    Read the full report here: https://lnkd.in/ekFbcXwr    My team at D. A. Carlin and Company are working with DFIs on structures to scale blended finance. Do get in touch as we’d love to share our experiences.      #blendedfinance #transitionfinance #emergingmarkets #climatefinance