Arriba - Emerging Markets to watch in 2015

Pendal Group

Pendal Group

Arriba - Emerging Markets to watch in 2015. The US recovery will have markedly varied impacts on Emerging Markets. For countries with strong manufacturing export sectors, it creates the potential for a substantial uplift in exports, GDP growth and corporate profitability. For countries dependent on domestic demand, US recovery poses the risk of higher bond yields and tighter monetary policy leading to weaker economic growth. Demographic effects on savings flows, secular stagnation or regulatory distortions may indeed keep bond yields down and capital flows to Emerging Markets up. Certainly, in 2014 the only one of 2013's 'fragile five' emerging markets to underperform was Brazil, and that had more to do with commodity prices and politics. Turkey, Indonesia, India and South Africa all outperformed the MSCI EM index. We remain positive on India (overweight with significant exposure to the banking sector) and find some opportunity in the South African exporter space (media conglomerate Naspers) but prefer to exercise caution on Indonesia, Turkey and, especially, Brazil. Which market is JOHCM Fund Manager James Syme now watching closely? Find out (VIEW LINK)


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