An emerging market is a country with young stock and bond markets. Examples include China, India, and Brazil.
What is an emerging market?
Investments in emerging markets, like their developed-market counterparts, offer additional risk compared with domestic assets. They have currency fluctuations and varying local economic policies. Emerging markets differ from developed markets on two factors: state-owned enterprises (SOEs) and market uncertainty.
SOEs can have small to almost full government ownership, which opens these companies to conflicts of interest. Since emerging markets tend to have less regulation and underdeveloped infrastructure, investments in these countries can be more volatile.