Today’s emerging markets, tomorrow’s powerhouses

A success story in the making

Welcome

Emerging markets are too varied to treat as a homogeneous asset class. Every country comes with its own distinct culture, idiosyncrasies, risks and opportunities and requires a different and considered approach.

At T. Rowe Price, our on-the-ground experience affords us a nuanced and selective view. We are ‘investment locals’, not tourists. Each country is our home, each opportunity our gain.

Economies like China, India and many others provide rich ground for long-term investors, who can no longer afford to underestimate the opportunities they offer, nor the promise they bring. Need some examples?

Trade volumes are expected to shift towards emerging markets, especially as annual consumption in emerging economies is poised to reach $30tn by 2025.[1]
In nine years’ time, seven of the world’s ten largest economies by GDP will be emerging markets.[2]
Education standards in emerging markets are improving significantly on the back of economic growth and strong public investment.[3]
[1] McKinsey: Winning the $30 trillion decathlon
[2] Standard Chartered
[3] Euromonitor International: Rising Education Standards in Emerging Market Economies Will Support Income and Economic Growth

Insights

Discovering Asia’s Cheap Growth Stocks

The cyclical rally is offering opportunities in previously expensive areas of Asian equity markets and for managers to uncover growth stocks ‘disguised’ as value.

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Asia investing in a post-COVID world

The Asia ex-Japan region has generally dealt with the pandemic better than other regions of the world. However, the fortunes of the region have been far more mixed in 2021 as the world tentatively returns to a form of normality.

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Let's talk: What investors make of emerging markets

The panellists of a Citywire roundtable event debated the ins and outs of emerging economies and discussed their role in portfolio construction.

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Who cares wins: ESG investing in emerging markets needs an active approach

A rising number of assets are now run with an environmental, social, and governance (ESG) mandate. According to a global survey by BNP Paribas, the percentage of asset managers that integrated environmental, social, and governance factors into their portfolios rose from 53% in 2017 to 62% in 2019.

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Emerging markets are at the forefront of a fintech revolution

Fintech has turned out to be the perfect match for emerging markets. Digital innovations in online banking and mobile payments are disrupting and reshaping the financial industry at a fast pace.

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Emerging market tech companies give Silicon Valley a run for its money

Emerging markets in Asia are reinventing themselves. With the onset of rapid mobile phone adoption and the triumph of the internet, we have witnessed huge change.

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Truths & Misconceptions

Emerging markets are slowly taking centre stage. Find out what makes them stand out and how you can make the most of the broad range of opportunities they offer.

Investing in China

China’s economic and financial evolution appears poised to accelerate in the wake of the pandemic. The implications are sizable both for the global economy and for the geopolitical balance of power. Yet, many investors may be underexposed to one of the world’s powerhouses.

Constructing a Chinese Equities Portfolio

Seek to exploit market inefficiencies and extract value from entire investment universe.

Emerging Markets Should Largely Keep Pace With U.S. Rebound

Yield curves may steepen as growth recovers

Webinars

2021 Midyear Market Outlook: Positioning for a New Economic Landscape

Just as the 2020 shutdown of much of the global economy by the coronavirus pandemic was unprecedented, the recovery this year appears historically unique. Economic activity is reviving far more quickly than was feared, producing a “V-shaped” recovery and looks set to accelerate in the second half of 2021, particularly in the U.S. However, economic policies and investment fundamentals both have been reshaped in ways that global financial markets are still sorting out and a high degree of unevenness, and uncertainty persists. We think this process will create both opportunities and risks in the second half of 2021, highlighting the potential benefits of a strong strategic investing approach. During this 2021 Midyear Market Outlook our investment experts will discuss four themes:

  • Building A Sustainable Recovery
  • A Focus on Earnings Growth
  • Creativity in an Era of Rising Yields
  • China: Too Big to Ignore

With Robert Sharps, Justin Thomson, Mark Vaselkiv, Rita Vohora

Tuesday, 15 June 2021 at 16:00 BST / 17:00 CET

About Us

Pioneers in emerging markets investing

Founded in 1937, T. Rowe Price is an independent investment management firm that has been investing in emerging markets since 1980. Today, we are one of the largest active EM asset managers in the world, with more than US$80 billion* invested in developing markets for our clients across equity, fixed income and multi-asset investment strategies.

Our Emerging Markets team is backed by one of the industry’s largest and most experienced buy-side research platforms with analysts located across the globe. This reach combined with our emphasis on meeting company management helps us to uncover the most attractive investments worldwide.

Moreover, at T. Rowe Price, we believe in team work and actively encourage collaboration between our fixed income and equity teams to share perspectives. This is especially worthwhile in emerging markets where we can utilise each other’s research, experience, and knowledge when analysing companies. Our fixed income research team often offer what we call “weather forecasts” for each individual EM economy. This is particularly useful in incorporating this top-down view when analysing individual companies.

troweprice.com

Fun Fact #1

Did you know that we have been investing in Emerging Markets before the term was even coined?
*As at 31 March 2021. Emerging markets AUM includes assets managed by T. Rowe Price Associates, Inc. and its investment advisory affiliates.

Funds

Equity

Asian Opportunities Equity Fund
A high conviction portfolio of around 40-70 Asia ex-Japan companies that we believe can reliably compound earnings and sustain strong cash flow generation over time. Put simply, we aim to buy high quality businesses run by high quality people.

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Risks – The following risks are materially relevant to for T. Rowe Price Funds SICAV – Asian Opportunities Equity Fund (refer to prospectus for further details): Country risk (China) – all investments in China are subject to risks similar to those for other emerging markets investments. In addition, investments that are purchased or held in connection with a QFII licence or the Stock Connect program may be subject to additional risks. Currency risk – changes in currency exchange rates could reduce investment gains or increase investment losses. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Issuer concentration risk – to the extent that a fund invests a large portion of its assets in securities from a relatively small number of issuers, its performance will be more strongly affected by events affecting those issuers. Small and mid-cap risk – stocks of small and midsize companies can be more volatile than stocks of larger companies. Stock connect risk – the fund may invest in certain Shanghai-listed and Shenzhen-listed securities (“Stock Connect Securities”) through the Shanghai-Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect respectively (“Stock Connect”). This mechanism carries higher risk. Volatility risk – the performance of the fund has a risk of high volatility.
Emerging Markets Discovery Equity Fund

A focused, yet well-diversified all-cap fund of typically 50-80 emerging markets companies. We seek to identify “forgotten” stocks that are under-owned and under-researched by mainstream investors, and which we believe are positioned to benefit from a fundamental re-rating.

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The following risks are materially relevant to T. Rowe Price Funds SICAV – Emerging Markets Discovery Equity Fund (refer to prospectus for further details): Country risk (China) – all investments in China are subject to risks similar to those for other emerging markets investments. In addition, investments that are purchased or held in connection with a QFII licence or the Stock Connect program may be subject to additional risks. Country risk (Russia and Ukraine) – in these countries, risks associated with custody, counterparties and market volatility are higher than in developed countries. Country risk (Saudi Arabia) – in Saudi Arabia it is necessary to use a trading account to buy and sell securities, introducing additional third-party associated risks. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Small and mid-cap risk – stocks of small and mid-size companies can be more volatile than stocks of larger companies. Stock connect risk – the fund may invest in certain Shanghai-listed and Shenzhen-listed securities (“Stock Connect Securities”) through the Shanghai Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect respectively (“Stock Connect”). This mechanism carries higher risk. Style risk – different investment styles typically go in and out of favour depending on market conditions and investor sentiment. Volatility risk – the performance of the fund has a risk of high volatility.
China Evolution Equity Fund

A style agnostic, index unconstrained portfolio investing in c. 40-80 names across A-shares, H-shares and US-listed Chinese stocks. We focus on areas of the market that may be overlooked by some investors, going beyond the top 100 largest companies in the China universe by market cap to identify future winners.

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Risks – The following risks are materially relevant to T. Rowe Price Funds SICAV – China Evolution Equity Fund (refer to prospectus for further details): Country risk (China) – all investments in China are subject to risks similar to those for other emerging markets investments. In addition, investments that are purchased or held in connection with a QFII licence or the Stock Connect program may be subject to additional risks. Currency risk – changes in currency exchange rates could reduce investment gains or increase investment losses. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Small and mid-cap risk – stocks of small and mid-size companies can be more volatile than stocks of larger companies. Stock connect risk – the fund may invest in certain Shanghai-listed and Shenzhen-listed securities (“Stock Connect Securities”) through the Shanghai-Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect respectively (“Stock Connect”). This mechanism carries higher risk. Volatility risk – the performance of the fund has a risk of high volatility.
Asian ex-Japan Equity Fund

An all-cap, growth-oriented portfolio of approximately 80-120 Asia ex-Japan stocks that represent our highest conviction ideas. The fund seeks to capitalise on the inefficiencies and growth potential of economies in the region.

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Risks – The following risks are materially relevant to T. Rowe Price Funds SICAV – Asian ex-Japan Equity Fund (refer to prospectus for further details): Country risk (China) – all investments in China are subject to risks similar to those for other emerging markets investments. In addition, investments that are purchased or held in connection with a QFII licence or the Stock Connect program may be subject to additional risks. Currency risk – changes in currency exchange rates could reduce investment gains or increase investment losses. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Small and mid-cap risk – stocks of small and mid-size companies can be more volatile than stocks of larger companies. Stock connect risk – the fund may invest in certain Shanghai-listed and Shenzhen-listed securities (“Stock Connect Securities”) through the Shanghai Hong Kong Stock Connect or the Shenzhen-Hong Kong Stock Connect respectively (“Stock Connect”). This mechanism carries higher risk. Style risk – different investment styles typically go in and out of favour depending on market conditions and investor sentiment. Volatility risk – the performance of the fund has a risk of high volatility.

Fixed Income

Emerging Local Markets Bond Fund

A diversified portfolio of the local-currency denominated bonds of emerging market sovereign issuers. The strategy seeks to provide generally lower levels of credit risk compared to external bonds, with meaningful opportunities in terms of local interest rate cycle and emerging markets currency exposure.

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Risks – The following risks are materially relevant to T. Rowe Price Funds SICAV – Emerging Local Markets Bond Fund (refer to prospectus for further details): Contingent convertible bond risk – contingent convertible bonds have similar characteristics to convertible bonds with the main exception that their conversion is subject to predetermined conditions referred to as trigger events usually set to capital ratio and which vary from one issue to the other. Country risk (Russia and Ukraine) – in these countries, risks associated with custody, counterparties and market volatility are higher than in developed countries. Credit risk – a bond or money market security could lose value if the issuer’s financial health deteriorates. Currency risk – changes in currency exchange rates could reduce investment gains or increase investment losses. Default risk – the issuers of certain bonds could become unable to make payments on their bonds. Derivatives risk – derivatives may result in losses that are significantly greater than the cost of the derivative. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Frontier markets risk – small market nations that are at an earlier stage of economic and political development relative to more mature emerging markets typically have limited investability and liquidity. High yield bond risk – a bond or debt security rated below BBB- by Standard & Poor’s or an equivalent rating, also termed ‘below investment grade’, is generally subject to higher yields but to greater risks too. Interest rate risk – when interest rates rise, bond values generally fall. This risk is generally greater the longer the maturity of a bond investment and the higher its credit quality. Issuer concentration risk – to the extent that a fund invests a large portion of its assets in securities from a relatively small number of issuers, its performance will be more strongly affected by events affecting those issuers. Liquidity risk – any security could become hard to value or to sell at a desired time and price. Sector concentration risk – the performance of a fund that invests a large portion of its assets in a particular economic sector (or, for bond funds, a particular market segment), will be more strongly affected by events affecting that sector or segment of the fixed income market.
Emerging Markets Corporate Bond Fund

A diversified portfolio of typically 100 to 150 securities in mainly corporate bonds from emerging market issuers. We would expect the bulk of value added to come from security selection, with the rest from sector selection. We employ a long-term investment horizon, combined with low portfolio turnover.

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Risks – The following risks are materially relevant to T. Rowe Price Funds SICAV – Emerging Markets Corporate Bond Fund (refer to prospectus for further details): China Interbank Bond Market risk – market volatility and potential lack of liquidity due to low trading volume of certain debt securities in the China Interbank Bond Market may result in prices of certain debt securities traded on such market fluctuating significantly. Contingent convertible bond risk – contingent convertible bonds have similar characteristics to convertible bonds with the main exception that their conversion is subject to predetermined conditions referred to as trigger events usually set to capital ratio and which vary from one issue to the other. Country risk (China) – all investments in China are subject to risks similar to those for other emerging markets investments. In addition, investments that are purchased or held in connection with a QFII licence or the Stock Connect program may be subject to additional risks. Credit risk – a bond or money market security could lose value if the issuer’s financial health deteriorates. Default risk – the issuers of certain bonds could become unable to make payments on their bonds. Derivatives risk – derivatives may result in losses that are significantly greater than the cost of the derivative. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Frontier markets risk – small market nations that are at an earlier stage of economic and political development relative to more mature emerging markets typically have limited investability and liquidity. High yield bond risk – a bond or debt security rated below BBB- by Standard & Poor’s or an equivalent rating, also termed ‘below investment grade’, is generally subject to higher yields but to greater risks too. Interest rate risk – when interest rates rise, bond values generally fall. This risk is generally greater the longer the maturity of a bond investment and the higher its credit quality. Liquidity risk – any security could become hard to value or to sell at a desired time and price. Sector concentration risk – the performance of a fund that invests a large portion of its assets in a particular economic sector (or, for bond funds, a particular market segment), will be more strongly affected by events affecting that sector or segment of the fixed income market.
Asia Credit Bond Fund

An actively managed, diversified portfolio of U.S. dollar-denominated fixed income securities of issuers domiciled, or exercising the predominant part of their economic activity, in Asian countries, excluding Japan. The fund seeks superior risk-adjusted returns via security selection and relative value trades.

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Risks – The following risks are materially relevant to T. Rowe Price Funds SICAV – Asia Credit Bond Fund (refer to prospectus for further details): China Interbank Bond Market risk – market volatility and potential lack of liquidity due to low trading volume of certain debt securities in the China Interbank Bond Market may result in prices of certain debt securities traded on such market fluctuating significantly. Contingent convertible bond risk – contingent convertible bonds have similar characteristics to convertible bonds with the main exception that their conversion is subject to predetermined conditions referred to as trigger events usually set to capital ratio and which vary from one issue to the other. Country risk (China) – all investments in China are subject to risks similar to those for other emerging markets investments. In addition, investments that are purchased or held in connection with a QFII licence or the Stock Connect program may be subject to additional risks. Credit risk – a bond or money market security could lose value if the issuer’s financial health deteriorates. Currency risk – changes in currency exchange rates could reduce investment gains or increase investment losses. Default risk – the issuers of certain bonds could become unable to make payments on their bonds. Emerging markets risk – emerging markets are less established than developed markets and therefore involve higher risks. Frontier markets risk – small market nations that are at an earlier stage of economic and political development relative to more mature emerging markets typically have limited investability and liquidity. High yield bond risk – a bond or debt security rated below BBB- by Standard & Poor’s or an equivalent rating, also termed ‘below investment grade’, is generally subject to higher yields but to greater risks too. Interest rate risk – when interest rates rise, bond values generally fall. This risk is generally greater the longer the maturity of a bond investment and the higher its credit quality. Issuer concentration risk – to the extent that a fund invests a large portion of its assets in securities from a relatively small number of issuers, its performance will be more strongly affected by events affecting those issuers. Liquidity risk – any security could become hard to value or to sell at a desired time and price. Sector concentration risk – the performance of a fund that invests a large portion of its assets in a particular economic sector (or, for bond funds, a particular market segment), will be more strongly affected by events affecting that sector or segment of the fixed income market.

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