Characterizing the course

Emerging markets are becoming an increasingly significant part of the global economy and financial markets.  By almost any measure, the strength and growth of emerging market economies is impressive.  Yet, emerging market equities still comprise a relatively small percentage of global market capitalization and institutional investor portfolios.

Institutional investors have been cautious in their allocations to emerging market equities, especially beyond the BRICs (Brazil, Russia, India, China).  Clearly, many investors recognize the potentially attractive return characteristics and diversification benefits of this asset class.  However, most pension plans and other institutions currently allocate less than 5% of their overall portfolio to emerging market equities.

Emerging markets, therefore, present an enigma. On one hand, these are the fastest growing markets, while on the other hand, in many cases they are primitive. What about the local economies? Emerging markets are characterized by market failures which often form leads to infrastructural bottleneck thereby excluding a large portion of its own people from enjoying the fruits of growth. In this course we will visit some of those issues.

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Assignment

Course Content

The course will have two distinct components. The first component will focus on financial markets—mainly the formal financial market—how emerging markets is similar to each other and different from the well developed markets. The second portion deals with the issues particular to emerging markets.

The main topics to be covered are:

• Are emerging Markets a Different Equity Class
• Growth drivers in Emerging markets
• Understanding the four majors BRIC
• Other emerging markets
• Understanding Financial Crisis in Emerging markets
• Formal versus informal finance in Emerging markets
• Understanding Micro Finance institutions
• Issues in risk management

The classes will involve lectures, discussions and exercises. A special emphasis on India will be given in the topics.