First used in the 1980s, the term ‘emerging markets’ refers to countries which are seen as being in the transition from a developing to a developed economy. Among the largest and most well-established are Brazil, Russia, India and China.

The nature of the populations of emerging market countries or their ‘demographics’ can create some advantages over so-called developed economies in the UK, US and Europe which are struggling to contend with increased numbers of older people and a shrinking working age population.

MSCI is among the most widely followed index providers for emerging markets. The MSCI Emerging Markets index consists of 24 countries. The other key categories which MSCI uses (in common with its peers) are Developed Markets and Frontier Markets. MSCI examines each country’s economic development, size, liquidity and market accessibility in order to place it in a given investment universe.

Developed markets have high levels of GDP per capita as well as transparent and capital markets which are open to foreign ownership. Frontier markets often won’t have developed  stock markets.

Economies do not move between these classifications all that often, but it does happen. At the end of the 2010s, Saudi Arabia was given emerging markets status by MSCI. Jordan and Morocco were countries which were relegated from the emerging to frontier market grouping earlier in that decade.

The last countries to move from EM to developed market status were Greece in 2001 (although it was subsequently returned to being an emerging market after its debt crisis in 2013) and Israel in 2010.

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