We use cookies to support features like login and allow trusted media partners to analyse aggregated site usage.
To dismiss this message and allow cookies to be used, please click "Continue".

Continue

Features

Twitter board

Follow us
  • "To get to the heart of some of the issues surrounding responsible investment we brought trustees, fund managers an… https://t.co/ujIdYI4gKI9 hours ago
  • RT @TimGiles90: @TimManuel17 on Trustee awareness of #climatechange ft in @portfolio_inst latest #aonexpertsinthenews https://t.co/WJdMA3MD…yesterday
  • Beyond bonds: How pension schemes are looking to update their LDI strategies https://t.co/qcq3fx3dJJ #ldi… https://t.co/Aj4PVgTz0G2 days ago
  • Friday View: Climate change: a hot topic - TPR prepares for master trust deadline - Prudential and Aviva's de-risk… https://t.co/c8N8HZ62HE6 days ago
  • As offices and workplaces are heating up, so is the debate on climate change: What are trustees doing to protect sa… https://t.co/U77fvAzS199 days ago
  • Friday View: Infrastructure: Land of opportunity  - FTSE 100 schemes are back in black - Brewery hit by TPR fine -… https://t.co/disYRfYaUw13 days ago
  • With 70% of pension schemes planning to allocate to infrastructure - the scramble for assets begins. Our latest cov… https://t.co/aWetZeBhq216 days ago
  • Exclusive: Border to Coast appoints new CIO https://t.co/mipd2Aeyvy #LGPS #pensions #LPGSpooling https://t.co/P0D1EQLvmu20 days ago
  • Friday View: PPF's Ian Scott - Border to Coast goes live - TPR launches master trust consultation - Railpen invests… https://t.co/mSeDHNrEjP20 days ago
  • Local authority pension pool Border to Coast goes live with two equity funds, hires new CIO: https://t.co/4uIWEpuD1C https://t.co/8UP3stSh9o20 days ago
  • Our interview with the PPF's Ian Scott is now live! “The uniqueness of what we do here at the PPF is sometimes over… https://t.co/On1pYg5aXJ22 days ago
  • Latest buy-in means @UK_CAA has de-risked £1.7bn of pension scheme liabilities - https://t.co/eFRK22wyI2 #pensions https://t.co/rrYgf0fQAr24 days ago
  • Friday View: Border to Coast launches UK equity tender - Rentokil Trustee faces fine - Gleeson directors banned - P… https://t.co/wx2SJ0bGfG34 days ago
  • Shareholder engagement: It’s good to talk For responsible investors talk isn’t cheap. Not only does research sugges… https://t.co/imwrezJuKJ34 days ago
  • Friday View: PA's DB scheme signs buy-out deal - PIC invests in Midlands housing association - Newton Video on Emer… https://t.co/GbWDdyENlN41 days ago
  • RT @minerva_ESG: Hey, all #ESG and#corpgov tweeps, lend a hand to @portfolio_inst important opportunity to support investors' understanding…41 days ago
  • We want to know your appetite and understanding for ESG! Please click the link to take our 5 minute survey to tell… https://t.co/SsVgQzEKIc42 days ago
  • RT @AonRetirementUK: Great event, thanks for hosting @portfolio_inst. Inspired location too! https://t.co/we7Ou46ns342 days ago
  • Full house at our Portfolio Prepared event, Oliver Hamilton Illiquids specialist @AonRetirementUK discusses conside… https://t.co/F0qPFPjUSP43 days ago
  • West Midlland Pension Fund’s Jill Davys: “I am reluctant to overpay for assets” Assistant director of investments a… https://t.co/YHtEIU5BSN45 days ago

On the radar

Emerging problems

Emerging problems

Stephanie Hawthorne
Tuesday 15th May 2018

After a five-year hiatus growth has returned to emerging markets, but could steel tariffs and US interest rate rises bring the dark days back? Stephanie Hawthorne reports

Emerging market equities bounced back in 2016 and 2017 after five difficult years. Underperforming developed market equities by almost 50% in US dollar terms has become a distant memory, but new clouds are gathering on the horizon.

US President Donald Trump’s new tariffs on steel and aluminium imports have heightened fears of a trade war, while there are concerns that expected rises in interest rates by the Federal Reserve could spook markets further.

More than 50 economies around the world, including frontier markets, are classed as emerging. These encompass the BRIC countries – Brazil, Russia, India and China – as well as Mexico, Indonesia, Nigeria and Turkey, a group known as MINT. Clearly, the term emerging markets embraces a variety of regions and sectors with no two markets identical in performance, but all tend to be volatile and high risk.

Yet emerging markets, as defined by MSCI, are dominated by a narrow set of countries with concentrated risks. China, South Korea and Taiwan are almost 60% of the MSCI Emerging Markets index. Financial services firm Barings points to some 70% of that index comprising information technology, financials, consumer and healthcare companies. All of these sectors are expected to enjoy secular growth as they remain under-penetrated and will be beneficiaries of the ongoing expansion of the region’s middle classes.

Indeed, the International Monetary Fund (IMF) expects emerging and developing economies to grow 0.2% during 2018 to 4.8%. This compares to expectations that the US economy will remain flat at 2.1% this year.

“Emerging and frontier markets combined are five times the population and growing twice as fast as developed markets,” says Marshall Stocker, Eaton Vance’s EM portfolio manager, who believes that population growth is not the only reason to look at the developing world.

“The S&P 500 is 50% more expensive (on a PE basis) than emerging and frontier equity markets while earnings are likely to grow at similar rates,” he adds.

Also bullish is Invesco Perpetual’s emerging market equities fund manager Nicholas Mason. “Companies are delivering on the earnings front and 2018 could be the first year since the financial crisis that the global economy will be operating at or near full capacity. “Economic growth in the emerging world should continue to be solid and inflation remains more or less under control,” he adds.

Page: 1 2 3 4
0

Leave your comment

View our comments policy

Please login or register with us to leave a comment. It's completely free!