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Civilize, 2015 states that

Our study focuses on emerging stock markets of countries that have a history of military rule. An investigation of these markets is valuable for investors, particularly during such periods of military interference, since these markets are important venues through which investors diversify and hedge against the country-specific uncertainty of their local stock markets

In this paragraph, the author says that emerging markets are the places that investors diversify and hedge against the country-specific uncertainty of their local stock markets. I am wondering why it is the case? I am asking this question because why investors do not invest in developed market to hedge but developing market, where are very uncertainty.

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  • $\begingroup$ The author doesn't really seems to be saying that emerging markets are the places where investors diversify against country-specific uncertainties. He's just stating that they are important places where they do that. He doesn't make a call (at least in this piece of text) on how important they are. $\endgroup$
    – Br.M
    Sep 1 at 19:37

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