DEER ISLE: Insights, Flows & Investment Trends
Rethinking Emerging Markets – Tariffs, Tech and Transformation
Institutional investors are re-evaluating their global strategies, particularly in emerging markets, due to structural changes driven by tariffs, technology shifts, and infrastructure investments. Rather than broad exposure, investors now favor selective targeting of markets aligned with strategic themes like supply chain diversification, digital innovation, and climate-focused solutions. Future emerging market growth will rely increasingly on strategic positioning and policy reform readiness.
Tariff changes are influencing global trade dynamics, possibly leading to new trade blocs with varying levels of U.S. involvement. The U.S. share of global GDP has declined to approximately 26% (nominally) from a historical average of 28%, and to 15% based on purchasing power parity (PPP), from over 20% historically. China currently surpasses the U.S. in PPP GDP, and India is quickly narrowing the gap.
China’s Heng Sang Index, reflecting investor confidence, is up 19% year-to-date, highlighting China’s expanding regional influence, strengthened by strategic partnerships with Africa and Latin America. India’s market, despite a modest decline (-2%) due to high valuations, remains a key player, emerging strongly in manufacturing and digital industries. A new trade bloc is likely forming around India, the Gulf Cooperation Council (GCC), and North Africa.
Countries benefiting from these global shifts include Vietnam, Indonesia, and Mexico, each capturing opportunities from supply chain adjustments, digital transformation, infrastructure projects, and nearshoring trends. Kenya is also emerging as a regional leader in fintech and renewable energy.
For a deeper discussion on these investment themes, you can access the recent CFA Institute and Institutional Investor webinar featuring insights our CEO/Founder, Dianna Raedle, as well as from Cynthia Steer, Sr Advisor, Institutional Investor and Jon Spinney, CIO Vestcor. Should you want to attend the CFA Institute and Institutional Investor “Invest In the Power of Connection” live conference on May 4 to 7 where there will be a panel on this topic as well as many other relevant topics – click here for more information.
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INVITATION: LSTA DealCatalyst U.S. Private Credit Industry Conference on Direct Lending, this May 12-13 at the Omni Nashville Hotel. Last year’s conference saw:
- 1,000+ attendees including 450+ fund managers and allocators
- 70+ industry leading speakers
- 24+ hours of content and networking opportunities
LPs/Allocators can register for free for a limited time using by CLICKING HERE [Use link https://hubs.la/Q037LSGm0]
Deer Isle have secured a 20% discount on tickets for GPs, just enter the promo code Deer20
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Capital Provider Interest: Large pension fund interested in stable assets with steady cash flowing investments.
Venture: Starting to see some daylight with biotech transactions. “Molecule” companies that could not raise capital over the last few years are starting to find some success.
Credit Markets: Generally outperforming on very limited liquidity. There are no “forced” buyers or sellers so limited pressure on the market to move. If the status quo becomes pushed – it’s likely that the value movement in the market will be large EM Credit: Emerging Markets cross border funding is increasingly tied to non-developed market flows – even when the funding is in USD. For instance, Brazilian / Ghana / Other EM LATAM and African Countries USD import/export financing is at lower rates (8 to 9% – approx. 200bps savings) with fewer covenants than the level at which US banks will fund similar risk. The local low USD funding occurs even if local currency rates are much higher such as Brazil where local rates are 23%+.
