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Old 09-05-2019, 03:18 PM   #1206
Hippocrates
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Join Date: Apr 2005
Posts: 104
BBC, in your view, what's the optimal allocation of IWDA and EIMI to cover this planet proportionally?

ST suggested 90% IWDA and 10% EIMI, which I think is out of whack? Given the size of China and Asia as a whole?

I asked more of less the same question sometime ago in Shiny Things' thread and received many useful answers.

Going by GDP, the allocation IWDA: EIMI should be around 2:1. If you are concerned that GDP might be biased by huge international companies operating in EM countries, then the GNI ratio based on IWDA: EIMI constituent countries is roughly 3:2 if memory serves me right!!

I guess the only reason for IWDA: EIMI market capitalisation ratio to be 9:1 is due to inflated valuations in the developed world market (for its presumably lower risk). My own allocation ratio is somewhere in between that derived from GDP/GNI and total market capitalisation, because I believe that (i) market valuation will regress towards its mean in long run and (ii) I'm taking a calculated bet on Chinese domestic market.
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