I was born in Brazil. This alone is sufficient for some people to instantly infer my passion for football – ‘the beautiful game’, as Pelé famously christened it – must be boundless.

They are not mistaken. Although I left Brazil when I was young, I am imbued with the spirit of o jogo bonito. Maybe above all, I have always loved watching the Brazilian national team.

In 2002, Brazil boasted a genuinely stellar front three of Ronaldo, Rivaldo and Ronaldinho. Dubbed “Ro-Ri-Ro” by adoring fans, this fearsome trident spearheaded the surge to a fifth World Cup. Whatever your football allegiance, it was wonderful to see them in action.

Today, though, I am more interested in another three Rs. In the tradition of the Seleção’s revered attacking trio, they might be dubbed ‘Re-Ra-Re’. They are reform, rates and revolution, and they could serve as a platform for a further memorable triumph – the outperformance of emerging markets (EMs).

Reform

Relatively poor standards of governance and stewardship have long been seen as an impediment to investing in EMs. This stereotype is now crumbling, perhaps most notably in Asia.

Japan has led the way. Last year, in an effort to curb the inefficient use of capital, the Tokyo Stock Exchange cracked down on underperforming businesses by demanding more evidence of both improvement and investor engagement.

South Korea is among the neighbouring nations that have since followed suit. Like Japan, it is urging listed companies to cut cash balances, raise dividends, buy back shares, and implement policies and practices that ‘place a priority on shareholder value’. China has also weighed in, issuing guidelines for the creation of a market that requires ‘the highest standards’ from businesses.

These are all important stories of relative improvement. Meanwhile, emerging markets such as India and many of those in Southeast Asia already have fairly advanced capital markets with robust regulatory frameworks.

Rates

The US is still the most powerful economy on Earth, and the dollar remains the world’s reserve currency. As a result, the Federal Reserve’s decision to reduce interest rates for the first time in four years clearly has global implications.

The significance for emerging markets should not be underestimated. The appeal of many of these markets is heightened when the US experiences a ‘Goldilocks’ scenario in which its economy is neither too hot nor too cold, as appears to be the case now.

On the one hand, there is little immediate prospect of a downturn in the US. On the other, EMs – especially those with strong fundamentals, such as can be found in Asia – are likely to attract additional investment flows as the dollar weakens.

The Fed’s move should also compel more emerging markets to press ahead with their own rate reductions. Most central banks in Asia have yet to begin normalising monetary policy, but this is likely to change over the coming months.

Revolution

Despite some EMs’ reputation for political instability, the revolution in question here is technological rather than constitutional. In particular, it is one fuelled by continued advances in the sphere of artificial intelligence.

Numerous Asian economies have substantial tech capabilities. South Korea, Taiwan, Malaysia and Vietnam are arguably foremost among them. They are acknowledged leaders in AI-related fields such as semiconductors, printed circuit boards, electronics, engineering and software.

As such, these countries are firmly at the heart of global supply chains. In turn, they are absolutely central to what could be one of the biggest investment themes of all time.

Crucially, many of the ‘tech enablers’ underpinning the revolution may be found at the lower end of the market-capitalisation spectrum. This reminds us that in emerging markets, as in other markets, smaller companies can represent the most promising long-term success stories.

A winning combination?

Of course, Brazil’s 2002 World Cup victory cannot be credited entirely to Ro-Ri-Ro. The squad as a whole was studded with established and future stars, including Roberto Carlos, Cafu and Kaká.

Similarly, it would be wrong to suggest hopes of emerging market outperformance rest exclusively on Re-Ra-Re. As with a football match, the picture is too multifaceted and fluid to allow for such simplistic conclusions.

In truth, there are numerous dynamics that might have an influence over time. They include demographic trends, the twists and turns of the commodities market and the impact of China’s recent stimulus package.

Nonetheless, it seems safe to suppose the three Rs will play major roles in shaping how investors view EMs – not just in the weeks and months ahead but over the longer term. They could make for quite a hat-trick.

Gabriel Sacks is co-manager of Abrdn Asia Focus (AAS ).

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