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Investors are planning to ramp up bets in emerging markets, according to the latest Markets Live Pulse survey — a sign the asset class is becoming a favourite for those wary of a US recession.
Some 61 percent of the 234 money managers, analysts and traders surveyed said they expect to increase exposure to developing assets in the next 12 months, even as concern mounts about a potential downturn and the Federal Reserve’s path ahead.
The asset class, they say, stands to offer shelter if the central bank’s fight against inflation tips the US into a recession.
“Economies in the developing world are far more resilient places today than they were 30 years ago, and EM central banks have been largely more responsible in dealing with the rise in inflation than the developed world has been,” said Justin Leverenz, who manages the $26 billion Invesco Developing Markets Fund, one of the world’s best-performing major emerging-equity fund this year.
“There is significant value across the emerging-market landscape,” he said. “Over the last 10 years, not only have EM economies become more resilient, they have been almost entirely neglected by global investors.”
Some 49 percent of the survey respondents said that even if a US recession causes a decline in emerging assets, their underlying growth and attractive valuations will still help them to outperform mature peers.
Malcolm Dorson, a money manager at Global X Management in New York, also said emerging markets are better-positioned than major economies in the wake of the pandemic.
That’s helping certain developing nations to avoid the same type of policy and stimulus hangover threatening the US and Europe.
“We see the potential for underlying growth to improve for EM, valuations are cheap, and EM’s long-term attraction remain undiminished,” said Devan Kaloo, global head of emerging markets at abrdn Plc. – Bloomberg
Online Reporter