Private investors may have to start re-thinking the way they view emerging markets in future.

Traditionally, emerging market funds have been seen as the high-wire artists of the investment world - exciting but dangerous, and always liable to be blown off course by the first puffs of wind presaging a financial storm.

But in this summer’s bout of stock market turbulence emerging markets actually proved more resilient than their counterparts in the developed world.

The reality, says Christian Deseglise, global head of emerging markets at HSBC Asset Management, is that emerging market countries and companies are making tremendous strides in tightening up their act and becoming globally competitive. From China to Brazil, Governments are cracking down on inflation and building up solid currency reserves, while companies are repairing their balance sheets, improving standards of corporate governance and paying greater attention to shareholder value.

Emerging markets are also becoming less dependent on the developed west to act as the engine of economic growth. The burgeoning middle classes in countries such as China and India mean that domestic consumption will play a much more important role in driving growth in the future.

This growth is set to continue outstripping that of the developed west, with emerging markets forecast to grow by 8 per cent in 2007 aqnd 7.6 per cent in 2008, far above the two to three per cent that the UK, US and europe are struggling to achieve.

This in turn will have implications on the weighting that investors ought to give to emerging markets in their portfolios. Percival Stanion, head of asset allocation at Baring Asset Management, says that the weighting of emerging markets plus Hong Kong and Singapore in the MSCI’s All Country World Index looks set to rise from the current level of 11 per cent to 33 per cent over the next decade - a huge increase which looks set to revolutionise the geographical mix of the average UK investor’s share portfolio.

Of course dangers remain. Emerging marekts would not be able to escape the impact of any global recession and in a falling stock market western investors might be spooked into abandoning their emerging market shares before those based closer to home.

But many global strategists expect emerging markets to continue their current outperformance over the medium to long term and believe this could be their Golden Age.

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