ALL THE ACTION these days seems to be coming from the emerging markets. Yesterday’s news that Tata of India really does want to buy Corus — the remnants of what used to be British Steel — is only the latest episode in the story that tells of how financial power and influence is shifting from West to East.

Not only is it an Indian company that is bidding for Corus, but if, as some assume, an auction breaks out, the chances are that a counter-offer will come from one of the other leading emerging economies: Russia.

Meanwhile barely a day goes by without someone somewhere demonstrating why the emergence of China is driving one sort of business opportunity or other. If it isn’t that Chinese construction activity is driving up the cost of commodities, it is that Chinese manufacturing capacity is lowering operating costs for Western firms or that the Chinese public hold the key for consumer goods companies.

Investors have enjoyed the emerging market action, too. As the chart below shows, the MSCI Emerging Market Index has delivered returns well in excess of those managed by the FTSE 100. London’s blue-chip index may be in territory not seen for five or six years, but it is still among the poor relations on the world equity stage.

This is curious, not least because there are a good number of emerging market stocks within the FTSE 100 family. Kazakhmys, the miner, may be the most exotic of the bunch. But it is only one among many. Indeed, there are 15 companies in the FTSE 100 that derive virtually all their revenues from outside the UK.

Not all are newcomers and not all are from Eastern emerging markets. Standard Chartered is about as established as they come. Old Mutual, Anglo American and SABMiller are among the South African firms that chose London as home for share trading. Antofagasta brings pure Chilean influence to the FTSE 100.

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The 15 are not all small fry: they account for about 16 per cent of the market capitalisation of the FTSE 100. They have also contributed about as much as could be reasonably expected in terms of investment performance. Vedanta, the Indian miner, and Kazakmys have been two best performing FTSE 100 shares over the past year.

It is curious to see the FTSE 100 underperform for a couple of other reasons, too. The first is that the US market seems to have have no such difficulties with the the Dow Jones industrial average — the bellwether for US stock prices — closing above 12,000 for the first time. It is often said that London catches cold when Wall Street sneezes. But it does not seem to be working both ways. While the the Dow is up 30 per cent over the past five years, the UK index is up only 23 per cent.

It might be thought that the FTSE 100 has lagged world rivals because there is something wrong with the UK economy. But even the fiercest critic of UK economic policy would struggle to justify such a claim. Besides, only about one third of FTSE 100 companies can be characterised as being anything like wholly British and they are among the smaller of the FTSE 100 companies, too. A large majority of the companies either earn all of their earnings — or a substantial part of them — outside Britain.

In market capitalisation terms, 80 per cent of the FTSE 100 can be regarded as being wholly or partly international. It seems that too much of the FTSE 100 international footprint is implanted in the US and EU. Meanwhile the emerging market influence on the FTSE 100 is heavily skewed towards natural resources.

Mining stocks have been the stars of the recent past, but can they be expected to maintain their momentum? If the prices of commodities such as copper and nickel continue to rise, they might. But it will not need big falls in commodity prices to undermine the value of the likes of Vedanta and Kazakhmys. Share price performance from here could look decidedly pedestrian even if commodity prices only stand still.

There are dangers lurking in London’s emerging market companies thanks to the fact that some seem to adhere to corporate governance standards that are below par. Shares in Kazakhmys and Vedanta, with only thin dividend yields, are also vulnerable to shocks.But it would be wrong to assume that these fears undermine all emerging market opportunities in the FTSE 100.

Movements of sterling on the foreign exchanges have also dampened the look of London-listed shares compared with indices in other parts. The underperformance of the FTSE 100 compared with other indices may indicate that they are more attractively priced at present.

The likes of Standard Chartered, SABMiller and Old Mutual bring plenty of emerging market exposure in sectors other than mining. The dividend yield on shares in HSBC, at 4.5 per cent, gives this large emerging market share, a Chinese play to boot, attractions that are as clear as any.

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