Credit Suisse’s Global Investment Returns Yearbook 2019


Here are a few interesting findings in Credit Suisse’s Global Investment Returns Yearbook 2019.

Firstly, it compared (very) long term returns of developed and emerging markets from 1900 to 2018. And that’s where context becomes important! The returns are nip and tuck up up until 1945 and then emerging markets take a hit (typically down to Japan losing heavily and China post communist victory). If the chart had begun in 1950, 1$ would have grown to double the amount for emerging markets compared to developed markets in 2018.

Secondly, looking at the present situation, emerging markets account for 68% of population, 40% of GDP but only 12% of investable market cap (emerging markets provide fewer opportunities typically due to lower free float in those markets).

Thirdly, purchasing power parity (PPP) holds true when inflation differentials of emerging markets and developed markets are compared to the currency differentials. In-fact, the regression line shows a very high correlation.

Here is the link to the report -