Against this backdrop, some might consider the emerging markets story well and truly over. However, such a view may be myopic. Recent developments could see the rise of two new emerging markets:

Iran

A deal has finally been struck in the negotiations between Western nations and Iran, meaning the international sanctions levied against the latter will likely be lifted in the near future. This again opens up Iran to membership of the global economy, and in turn opens up the Iranian economy to Western investors. The prospect has excited analysts.

“New emerging markets tend to be underdeveloped politically and economically, with embryonic stock market infrastructure,” says Dominic Bokor-Ingram of Charlemagne Capital.

“None of these issues are apparent in Iran. It’s a developed country with a very diverse economy and a fully-functioning, highly advanced stock market. The moment sanctions are lifted, investors in the UK will be able to put money in quickly and easily. We’ve never seen remotely comparable conditions in a new emerging market before.”

At present, the Tehran Stock Exchange has a market cap of just over £1bn and trades an average £65m daily, on 5.35x earnings. It offers a dividend yield of around 15 per cent.

In global terms, Iran currently boasts the largest oil and gas reserves, and the fourth largest oil reserves. However, Bokor-Ingram notes that oil exports account for around 11 per cent of the Iranian economy. While the lifting of sanctions will undoubtedly increase supplies from Iran, it will also improve Iranian access to sought-after Western goods.

“Iran’s population stands at around 80 million, which means opportunities in consumer sectors are of great interest. For instance, a million cars are sold every year in the country, despite limited availability. In particular, the country’s banking and telecommunications sectors are ones to watch.”

Jan Dehn, head of research at Ashmore, believes Iran’s elevation will benefit the wider emerging markets sphere.

“Neighbouring Turkey stands to benefit materially from consumer and industrial exports, construction contracts and service-related income that would come with greater volumes of goods transiting the country en-route to and from Iran,” he notes.

“The Iranian economy is already the 18th largest in the world on a PPP [purchasing power parity] adjusted basis, but it requires considerable investment and modernisation after the long period of isolation. The Iranians have already reached out to major regional partners Egypt, Oman, Turkey and the United Arab Emirates for help. Investors may wish to seek exposure to relevant businesses based in those countries.”

Vietnam

Vietnam is currently considered a frontier market, but could soon be promoted to emerging market status.

The country’s stock market is in its infancy, having been established in 2000 – and it has crashed on two occasions since then. The number of domestic investors is low, and state interference in industry – both publicly listed and privately owned – is relatively common. Despite this, Vietnam’s potential as an emerging market has been noted by a number of investors for some time – although market illiquidity and a failure to meet accessibility requirements means the country is restricted to the MSCI Frontier Market index.

Now, Vietnamese Prime Minister Nguyen Tan Dung has announced that foreign ownership limits on most listed companies will be lifted in September. Exemptions will still apply for state-owned companies, but the move will end the strict, market-wide 49 per cent cap on foreign ownership. Previously, buying shares in Vietnamese firms was problematic for UK funds and investors, who had to rely on domestic investment trusts tracking overall market performance to access the country.

“The move is undoubtedly hugely positive for foreign access, index weights and associated fund flows,” says Oliver Bell, manager of the T. Rowe Price Frontier Markets Equity fund.

“However, another extremely positive development – perhaps even more significant – is the US Senate’s recent authorisation of the Trade Promotion Authority. This clears the way for finalising the ground-breaking free trade agreement, the Trans-Pacific Partnership (TPP). This is an agreement among 12 member countries, which comprise about 40 per cent of global GDP.”

For many markets in Asia, the TPP could be a major positive. Vietnam will benefit from preferential access to larger developed markets, such as Japan and the US. It has been forecast that TPP could boost Vietnam’s GDP by over 13 per cent by 2025. The country is already growing at an average of 6 per cent a year, and consultancy firm EY projects this to continue in years ahead. The Vietnamese stock market – the VN Index – is up 19.5 per cent so far this year, at 14x earnings.

“Overall, we are bullish on Vietnam, with the country the largest absolute and relative weighting in our frontier markets equity fund,” Bell concludes.