Emerging Markets — What Now?

Head of manager research and investment solutions at BNY Mellon Investment Management Cynthia Fryer Steer identified trends in emerging market investing

One of the biggest challenges that emerging markets are currently facing is the issue of governance, said Cynthia Fryer Steer, head of manager research and investment solutions at BNY Mellon Investment Management, speaking at Sage Hall for the second year in a row. Steer, who has spent most of her career working with emerging markets and identified significant changes over time, shared her observations on Jan. 24, 2013 in a talk sponsored by Johnson’s Emerging Markets Institute, “Emerging Markets — What Now?”

Steer is responsible for performance oversight, due diligence and analysis of investment performance across BNY Mellon Investment Management, and is the senior investment advisor to the executive management of BNY Mellon Investment Management. She also focuses on measuring and analyzing the firm’s investment strategies and its overall solutions effort, and provides ongoing thought leadership on global investment strategy.

“In business, one thread of reasoning is always true, and that is that good governance is good governance is good governance,” Steer said. Emerging markets should take the opportunity to find leaders that are qualified and will stand the test of time, she explained, because good governance is important not only at the birth and inception of a new market, but in the long term as well.

Long-term thinking is important for emerging markets not only in terms of governance, but in terms of investment, as well. “There just isn’t enough money being put into the long-term run of emerging markets, and that’s a problem,” Steer said.  “You can’t have a successful market or any growth if money is constantly running out.”

Steer also noted some positive changes, such as a transition away from the traditional, “Anglo” approach to doing business. Emerging markets, Steer explains, are moving towards business protocols that are more consistent with their own cultural traditions and beliefs. “The Anglo way isn’t necessarily the right way to do business, and the fact that they’re moving away from it is a good thing, I believe. It means they’re developing their own business identity which is tremendously important.” she said.

Other changes include an increasing trend in investing in real estate and insurance. “The move towards real estate is a great one because it’s better than other investments, including bonds,” she said. “It’s a real asset, and it provides a real yield, and you can’t beat that.”

While emerging markets have already made a tremendous impact on the business industry, Steer emphasized the fact that they are still emerging, and it will take some time before it becomes clear where they are heading.

“Only time will tell what’s going to happen with emerging markets,” she says. “But one thing is certain: It’s their day.”

— Maria Minsker ’13