INVESTING IN EMERGING MARKETS: AN ANALYSIS AT COUNTRY, INDUSTRY AND COMPANY LEVELS

Over the last decade a number of studies have examined the costs and benefits of investing in equities traded in emerging markets. Many of these studies have focused on aggregate index data supplied by the IFC. By contrast, the present investigation employs disaggregated weekly returns data for the top 20 shares, by market value, from 17 emerging markets between 1991 and 1996. It examines the possible gains from international diversification into these markets and determines whether knowledge of the country in which a selected company is located is more important than knowledge of the industry in which it operates.