Profile and potential

HSBC has established branches even in countries that have been considered closed, restricted or highly centralised.  Working actively in these markets, the Bank has been a respected institution in these  markets for many years.

Source: 'A battle of ills', HSBC Global Research Macro Global Economics Q2 2008

Source: 'Goodbye to all that', HSBC Global Research Macro Global Economics Q1 2008
¹ Industrial production growth in emerging markets was twice to five times that in developed economies
² Even in periods of economic slowdown in developed economies, exports from emerging markets continue to grow, showing less dependence on the former

Risks and rewards

Many investors look to diversify their portfolios across different economies, thereby distributing risk, while others seek out new, more affordable opportunities that 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. And, as recent economic indicators have shown, it is possible for emerging markets to accelerate their growth while more developed economies slow down.

HSBC Group Chairman Stephen Green was co-chairman of the Capital Markets Consultative Group of the International Monetary Fund (IMF) which authored the 2003 Foreign Direct Investment in Emerging Market Countries report. The group observed that foreign direct investment (FDI) flows started streaming towards emerging markets in the 1990s. These were made possible primarily by mergers and acquisitions, particularly of state-owned assets. Since the writing of the IMF report, net foreign investments in the emerging markets have surged upwards.

Aside from good growth prospects, productivity-adjusted labour costs (labour efficiency rather than the cost of labour per se), physical and personal security, and good governance are among the country characteristics investors examine when considering investment in an emerging market.