For years, managers in most investment funds, especially the ones located in emerging markets, have concentrated a big part of their assets in BRIC countries, widely recognized as commodity-heavy economies. However, there is a new investment preference now, coming into the trend among funds and capitalists – technology-centric economies, including so-called TICK countries (Taiwan, India, China, South Korea). Not only does it mean that fund investments move to tech-heavy economies, but it also implies assets’ reallocation towards tech companies that are grabbing considerable shares in individual baskets. Some experts explain such a crucial reallocation of funds by a consequent reaction to the end of the commodity cycle. Others look even further and see very perspective cooperation between emerging markets and digitalized economies in such a revolutionary move.
Currently, emerging markets are gradually migrating from typically “production” economies towards “consumption” economies with a rapidly growing purchasing power. Influenced by the digital revolution, emerging societies are thus turning into maturing consumer markets, even in those commodity-centered countries. All this reminds another stage in the world industrial development: well-off middle classes create an unprecedented size of goods’ consumption. New standards have significantly transformed our future expectations, which encouraged the growth of large consumer-oriented companies.
Plus, the digital age brings several additional changes to the whole development scenario: the instant flow of innovation and constantly appearing new products boosts increasing customer adaption. As a result, we can see an increasing number of large tech companies appearing in emerging markets, including the CEE region, with a high concentration of asset managers at the same time. In addition, digitalization leads to the settlement of consumer-centric economy, breaking information monopoly and creating immediate access to a wide range of goods. Eventually, the whole process reaches the global level and provides companies with access to the international audience.
So this is how we find the growing share of investment being now directed towards TICK countries, where tech companies are creating all the positive vibe. And those are joined by the emerging economies, including the countries of Central and Eastern Europe.
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