In many emerging markets, the value of all the freely traded shares of firms that feature in the local MSCI share index (which typically tracks 85% of local listings) is equivalent to a single Western firm, according a recent report by the Economist on Saturday.
For instance, the value of the listed firms in the Egyptian Exchange (EGX) is equivalent to the global chain of hamburger fast food restaurants Burger King Worldwide Inc (BKW:New York).
The report suggests that the emerging economies need deeper, more liquid markets- and investors need more perspective.
“Investors love the promise of high returns from emerging-market equities, but there are not many of them to buy. Especially if you exclude stakes held by governments, the market capitalisation of bourses beyond the rich world is tiny.” The report noted
Moreover, the report said Argentina’s market could be matched to the multibillion dollar global retailer with warehouse club operations in 10 countries; Costco Wholesale Corp (COST:NASDAQ GS). Shares traded in Brazil’s bourse are equivalent to Google Inc (GOOG:NASDAQ GS)’s total capital; whereas Turkey’s are matched to the world’s largest coffee-shop chain Starbucks Corporation (SBUX:NASDAQ GS).
Thus all the shares available in India are worth roughly the same as Nestlé SA (NESN:SIX Swiss Ex).
Meanwhile, the report further shows that shares trading in South Africa are the same as General Electric Co (GE:New York). In Russia, the shares traded are roughly the same as Procter & Gamble Co/The (PG:New York), the world’s largest consumer-products maker.