The rise of high-growth industries in emerging markets

Rapid technological advancements have unleashed myriad opportunities in emerging markets for investors. Franklin Templeton highlights how everything from the raw materials of high-tech devices to areas like electric vehicles and green energy is being dominated by emerging markets.

“A significant part of the ‘next billion’ of middle-class consumers will come from emerging markets, which we believe will continue to drive both consumption growth and premiumisation,” opines Chetan Sehgal, Senior Managing Director, Director of Portfolio Management at Franklin Templeton Singapore.

According to the asset manager, the digitisation of payment and the development of logistics have opened new opportunities in several emerging markets across e-commerce, logistics, food, and mobility. It additionally mentions that emerging markets are poised to take a leading role in the production of the sought-after semiconductors essential for artificial intelligence applications.

“While developed markets, including the United States, are striving to reduce their reliance on markets overseas for these vital components by building manufacturing plants at home, emerging markets are participating in that asset creation process even though it might be a costly and lengthy process,” says Sehgal. Speaking about emerging industries, the asset manager also pointed to financial services such as lending and insurance.

Franklin Templeton further states that the global commitments to reduce carbon emissions are driving renewable energy demand, where emerging markets play a vital role. The asset manager further informs investors that the new industrial groups would appear out of these trends, but the pace of growth might not always be the same. 

“We think it’s important for investors to be selective—we look at prospects of individual companies rather than make distinctions between growth and value,” suggests Sehgal. The asset manager also points out that sudden geopolitical changes can also bring about changes in the pace of growth.

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