Emerging Markets in the Digital Age
2019-12-15 10:22

My colleagues and I have been actively speaking about the evolution taking place in many emerging markets over the past few decades. We've seen dramatic shifts occurring, with the often one-dimensional economic models of the past giving way to new and diverse growth drivers. This evolution includes the rapid embrace of new technologies and the rapid digitalization of economies. Here, Carlos Hardenberg, senior vice president and managing director at Templeton Emerging Markets Group, further addresses the topic.

我和同事们一直在热烈讨论过去几十年很多新兴市场的演变。我们见证了许多翻天覆地的变化,过去常见的一维经济模式,现已被新型且多元化的动力增长模式所取代。这种演变包括快速接受新科技和数字化经济迅猛发展。邓普顿新兴市场团队高级副总裁兼董事总经理卡洛斯·哈登伯格(Carlos Hardenberg)将在文中进一步谈论这个话题。

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Looking at emerging-market economies as a whole, we've seen a dramatic transformation from the models of the past, which were often based on commodity exports. We've seen a new generation of highly innovative companies located in emerging markets moving into higher value-added production processes and services. We think it's a very exciting time for investors in this space.


The technology sector in emerging markets is providing us with many interesting opportunities—from hardware to software to various forms of e-commerce and entertainment.


Autonomous driving is an example of the growing clout of emerging-market companies. Many producers of the components and infrastructure to make autonomous driving a reality are located in emerging markets, particularly in Asia. And, they are highly specialized. For example, sensors, cameras, other lightweight components and software to enable autonomous driving are oftentimes produced in emerging markets.


Another example is in mobile-phone technology. Some 80% of the components of one popular mobile phone are made in emerging markets, from the battery to the camera to the casing (see image below).

移动电话技术是另一个例子。一款畅销手机约 80%的零部件都产自新兴市场,从电池到摄像头再到外壳(见下图)。

We know how technology has touched nearly every aspect of our lives. It has transformed how we communicate with each other, how we shop, work and play. This is true for consumers across the globe, even in what one might consider the least-developed economies. It has been estimated that 40-50% of the world's population has access to the internet, and 70% of youth aged 15-24 use it.1 It wasn't all that long ago that no one did.


The number of internet users has increased tenfold from 1999 to 2013. The first billion was reached in 2005, the second billion in 2010 and the third billion in 2014.2 When looking at the amount of internet users globally, China (21%) and India (14%) have the largest share, above the United States (9%), Japan (3%) and Germany (2%).3


China's “Internet Plus” strategy, unveiled in 2015, demonstrates the key role the government hopes online businesses will play in fueling its next stage of economic growth. The strategy aims to increase digitalization across the economy and to increase the presence of China's internet-based businesses globally.


Many members of this new generation of “digitalized” consumers (including those in emerging markets) have probably never visited a physical bank branch, have never used a telephone tethered to a cord and are increasingly shunning brick-and-mortar stores to buy clothes and other wares online.


This increasing internet access means increasing opportunities. Take Indonesia, for example. Research from the International Telecommunications Union has found for each 1% increase in the internet penetration rate, unemployment growth would be reduced by 8.61%.4 The entire effect of broadband on unemployment is a combination of new jobs and existing jobs saved that otherwise would have contributed to the unemployment rate.5


In turn, consumers have more discretionary income, and the middle class is able to gain more clout. This increased spending power has driven a more consumer-oriented culture, and new and more diverse investment opportunities.


According to McKinsey research, if Indonesia fully embraces digitization, it can realize an estimated USD $150 billion in growth—10% of GDP—by 2025.6 Harnessing digital technology can boost productivity and expand economic participation across the economy. While e-commerce is growing rapidly in Indonesia—one of the world's 10 largest economies by purchasing power parity—there is still room for more progress.


In 2013, the Pew Research Center surveyed nearly 40,000 people in 39 countries and asked the question: Will children in your country be better off than their parents?7 Interestingly, in most of the advanced economies, the answer to the question was overwhelmingly “no.” Two-thirds of people surveyed in the United States answered that way, and the people in Britain weren't much more optimistic their children would be better off than them, either.8


In contrast, in China, 82% of those surveyed expected their children to do better, and in Brazil, 79% felt that way.9 In Chile, Malaysia, Venezuela, Indonesia, the Philippines, Nigeria, Ghana and Kenya, the majority of people surveyed also believed that the next generation will be better off than the current one.

相比之下,中国 82%的受访者预期他们的孩子会过得更好,而巴西则有79%的人这么认为。[9]在智利、马来西亚、委内瑞拉、印尼、菲律宾、尼日利亚、加纳和肯尼亚,大多数受访者也认为下一代人的生活将会比这一代更好。

A Changing Profile


Not only have consumers changed, the profile of what one might think of as an emerging-market company has as well. In the past, these businesses were generally fairly simple, nascent business models. They were highly geared towards infrastructure.


During the last 10 years or so, we've seen a gradual migration to  increasingly sophisticated business models. Emerging-market companies have established their own brand names, their own niches and have expanded beyond their home countries or region, often by acquisition.


We are seeing a new generation of emerging-market companies develop. By and large, emerging-market companies have also seen healthy cash-flow generation and improving earnings. In the past, there were certain periods where corporate balance sheets were under severe stress due to foreign-exchange debt. They ran into problems, particularly when the local currency came under pressure.


Today, these currency issues seem to be managed much better and corporate balance sheets appear to be much healthier. In general, emerging-market companies have deleveraged over time; they have cleaned up their balance sheets and repaired their business models.


It's Still about Growth


One characteristic that has generally defined emerging markets in the past—and still does—is their high growth rate. Emerging-market economies have been growing significantly faster than developed-market economies, and we anticipate this trend should likely continue.


Despite this higher rate of growth, valuations generally appear much more reasonable than in developed markets. You can invest in many of these companies at a price that is a significant discount to what you would have to pay to invest in an equivalent business in the developed world.


Business models in emerging markets have become far more sophisticated and robust than they ever were in the past. We are very excited about the opportunities we're finding in emerging markets today and the potential for the future.


Carlos Hardenberg's comments, opinions and analyses are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. Because market and economic conditions are subject to rapid change, comments, opinions and analyses are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment or strategy.


Important Legal Information


This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. The companies and case studies shown herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton Investments.

本文只供一般性参考,不应被视为个人投资建议,或推荐投资者购买、出售、持有任何证券及采纳任何投资策略的建议或招揽,不构成法律或税务咨询。本文所列的公司和案例研究仅供说明;富兰克林邓普顿(Franklin Templeton)所建议的任何投资组合目前尚未确认是否存在投入。

The opinions are intended solely to provide insight into how securities are analyzed. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. This is not a complete analysis of every material fact regarding any industry, security or investment and should not be viewed as an investment recommendation. This is intended to provide insight into the portfolio selection and research process. Factual statements are taken from sources considered reliable but have not been independently verified for completeness or accuracy. These opinions may not be relied upon as investment advice or as an offer for any particular security. Past performance does not guarantee future results.


The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market.


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What Are the Risks?


All investments involve risks, including the possible loss of principal. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets' smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions.


To get insights from Franklin Templeton delivered to your inbox, subscribe to the Investment Adventures in Emerging Markets blog.

有意从富兰克林邓普顿(Franklin Templeton)的邮件中了解更多信息,请订阅“新兴市场的投资冒险”(Investment Adventures in Emerging Markets)博客。

For timely investing tidbits, follow us on Twitter @FTI_Emerging and on LinkedIn.

有意及时投资的话,请在推特上关注 @FTI_emerging和LinkedIn。

The technology industry can be significantly affected by obsolescence of existing technology, short product cycles, falling prices and profits, competition from new market entrants as well as general economic conditions. The technology sector has historically been volatile due to the rapid pace of product change and development within the sector.




1. Sources: Internet Live Stats, International Telecommunications Union Facts and Figures, 2019.

[1] 资料来源:互联网实时统计、国际电信联盟事实与数字,二零一九年。

2.Source: Internet Live Stats, 2019.

[2] 资料来源:互联网实时统计,二零一九年。

3. Ibid.

[3] 同上。

4. Source: International Telecommunications Union, “Impact of Broadband on the Economy,” April 2012

[4] 资料来源:国际电信联盟,“宽带对经济的影响”,二零一二年四月。


[5] 同上。

6. Source: McKinsey & Company, “Unlocking Indonesia's Digital Opportunity,” October 2016. There is no assurance that any estimate, forecast or projection will be realized.

[6] 资料来源:麦肯锡公司,“开启印尼的数字化机会”(Unlocking Indonesia’s Digital Opportunity),二零一六年十月。不保证任何估计、推测或预测会实现。

7. Source: Pew Research Center, “Welcome to the Global Middle Class Surge,” July 2013.

[7] 资料来源:皮尤研究中心,“全球中产阶级汹涌而至”(Welcome to the Global Middle Class Surge),二零一三年七月。

8. Ibid.

[8] 同上。

9. Ibid.

[9] 同上。

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