Over 30 PGIM investment professionals, as well as leading academics and policy-makers from around the world, were interviewed to debate the most striking developments across emerging markets (EM), the likely winners and losers, and the most attractive investment themes arising from the evolution of EMs.

The developed market-oriented, export-led growth model that propelled EM growth since the 1980s is stalling due to a variety of factors. Increasingly, EM countries will be the masters of their own fate, with growth dependent on their individual abilities to capture domestic and regional opportunities. Navigating the risks and opportunities offered by this new EM order will be an increasingly important driver of portfolio returns over the long term.

Opportunities and Risks

If emerging markets can no longer ride on the coat-tails of developed-market economic growth, global trade liberalization or Chinese supply chains, where will growth come from—and what are the opportunities and risks investors should focus on?

• The growing importance of trade between emerging markets, as epitomized by China's New Silk Road initiative.
• The demographic dividend, particularly in South Asian and African emerging markets with an expanding working-age labor force.
• The domestic consumption needs of the rising EM middle class, which is increasingly urban, aspirational, connected and wealthy.
• The opportunities presented by digital disruption, especially in countries that make the necessary investments in broadband, education and regulatory reform.

Harnessing the power of deeper and broader local capital markets, which are unlocking financing opportunities for local firms. Capturing future EM opportunities will require taking a significantly different investment approach.

Small Cap, Big Value: Emerging Market Stocks

Ed Keon, Managing Director for PGM Quantitative Solutions, discusses how small cap emerging market stocks represent an opportunity for their long-term growth potential and for portfolio diversification.

Emerging Markets Debt—The Re-Rating Opportunity

Arvind Rajan, Head of Global and Macro for PGIM Fixed Income, shares three perspectives on the long-term prospects of emerging vs. developed markets.

Opportunities in Emerging Market Real Estate

Lee Menifee, Head of Americas Investment Research for PGIM Real Estate, highlights the trends in emerging markets that are creating investment opportunities for real estate, including the emergence of a middle class and the growth of that middle class.