About emerging markets
Published: 03 July 2010
Emerging markets and opportunities
Emerging markets have always been firmly at the heart of HSBC's corporate identity. Throughout its history, the bank has maintained a strong presence in global trade, particularly in India and China, which are currently the two leading emerging markets.
This rich international background serves Global Banking and Markets well, as it delivers a host of financial solutions for clients seeking expertise and experience in emerging markets.
Profile and potential
Emerging markets are developing economies in a state of structural transition, and growing fast.
They represent approximately 80 per cent of the world's population, and 20 per cent of the world's economies. Typically, they are transforming from traditional political and economic systems of government to more open market models.
As the driving force for development in their regions, any major changes in an emerging market are likely to reverberate throughout its region.
Needs and prerequisites
Internally, emerging markets depend on continuous reform to sustain the increasing demands of development. The momentum from reform is driven by the need to raise living standards, increase opportunities for the local population, and encourage foreign investment.
Greater transparency is a critical requirement, improving the efficiency of markets and the value of capital. Stabilisation of the foreign exchange rate system is likewise key to building internal and external confidence in the local economy.
Externally, an emerging market must attract increased foreign investment to fuel its rapid drive towards development. Although many emerging markets continue to receive overseas aid, the most successful have broken that dependency by developing their capital markets to court foreign investments.
Risks and rewards
Many investors look to diversify their portfolios geographically, thereby distributing risk, while others seek out new, more affordable opportunities than may be available in the leading industrialised nations.
In today's global economy, emerging markets have become a staple of many investor portfolios because of the high future rewards associated with being the first to put money into companies and economies with good growth potential.
As emerging markets continue to evolve, the global investor is faced with unique risks and opportunities. For this reason, progressive and pioneering investors value the guidance of financial experts who are familiar with such markets.
Hongkong and Shanghai Banking Corporation Limited, the founding member of the HSBC Group, was established over a century ago to finance the trade between Europe, India and China. As early as 1865, the Bank saw promise in the economies of Asia and invested when many others preferred caution. It is this experience with and expertise in emerging markets that HSBC clients have valued and benefited from over the years.
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