Is this the emerging markets (EM) century? Will China rule the world? Are debtridden
Western economies with broken growth drivers and rapidly ageing societies on
an irreversible path towards stagnation and decline? These penetrating issues are too
weighty for the cut and thrust of an Asset Allocation committee’s regular investment
meeting. But in the volatile and unpredictable post-crisis world—witness the eruption of
U.S. trade law proposals, currency wars, U.S.-China political tensions, inward capital
controls—they are the nuts and bolts of how the global economy and asset markets are
going to behave in the next few years. I argue below that the consensus view about the
future of emerging markets isn’t as robust as it believes, and investors need to be
especially careful.....