Every so often, one thinks that something has changed, and it is time to alter one’s portfolios to reflect this. And what has changed is that the surge in emerging economy growth both in absolute terms and relative to that in developed economies has now come to an end. Two factors are important – emerging economies relative labour advantage has been eroded through rising wage costs and following on from that, export led growth will be much more difficult. Secondly, capital is still flowing from emerging economies to the developed world, partly capital flight and partly portfolio diversification. Thus it is hardly surprising that developed markets are outperforming emerging markets. Sadly, in terms of reorganising portfolios, it is easier to see those sectors that will suffer from this trend as opposed to those that will benefit. These are commodity producers who will not find China such an easy place to sell to, and secondly, companies who have profited from cheap outsourcing from China, such as IKEA. One consequence of this change is that the growth in income inequality within both developed and emerging economies may well have come to an end. The reasons are rising wages in emerging economies and in developed economies, the shift of manufacturing jobs overseas is now being reversed.