Strategy in Practice

In the second half of the 20th Century, the economic and political institutions of the developed world began to disseminate throughout the emerging markets. The introduction of these institutions—such as the rule of law, trade freedom, and the unencumbered market—soon attracted investment to Latin America, East Asia, and the former Soviet bloc, allowing these regions to grow.

The resulting maturation of the emerging economies was at first tepid and uneven but has, in the last decade, quickened in pace and become increasingly self-sustaining. Emerging markets now encompass more than 75% of the world’s population and are expected to contribute more than 50% of global GDP within the current decade. Boasting younger populations and higher birth rates, they are projected to grow at two to three times the rate of the developed world over the next ten years. And while debt and fiscal instability has hampered confidence in the United States and the Eurozone, the emerging world has consolidated its finances and accumulated reserves.

Silva Capital believes that these relative discrepancies are not transitory phenomena. Moreover, they are reflective of the longer-term global rebalancing of capital. The emerging markets have been revealed as the new engines of global growth and investment. We believe that currencies and sovereign debt are ideally positioned to benefit from the resulting transformation.