Consistency Drives Returns in Emerging Markets

Rob Brewis of Aubrey Capital Management defines quality in emerging‑market equities by ROE ≥15%, cash generation and mid‑teens earnings growth.
Companies relying on borrowing or equity issuance dilute shareholders, a risk highlighted in China where earnings per share lag aggregate earnings growth.
Varun Beverages’ returns surged after southern‑India expansion but faced competition from Reliance Industries, causing normalization; Eicher Motors and TSMC showed steady compounding.
Over the past year quality‑focused firms underperformed due to India slowdown, China slowdown and valuations, though fundamentals remain strong and volatility persists.