December 2012_issue_18
This chart, showing international industrialisation levels from 1750 to 2009, illustrates how the balance of power has shifted over time. Back then, China and other developing markets boasted a much greater share of global industrial output, before being completely overshadowed by Europe and the us in the 1900s.
In the first decade of the 21st century, emerging markets had begun their comeback. so what does this mean? investec portfolio manager and sector specialist Archie Hart says: “a bear might look at the chart and simply put this movement down to it being cyclical; developed markets will eventually recover and emerging markets will go through a cyclical recession.
“I think you can argue it rather differently. If you look at the 1900s it was a remarkable period in how strong the US and Europe were as a percentage of global industrial output and how small the emerging markets were. So you might argue that what we are starting to do is revert back more to the norm, from an environment which is very overweight US and Europe to one that is more balanced.”
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