Stock markets across the emerging economies have not escaped the recent global equity market turmoil but the outlook for economic growth remains strong, according to F&C’s Sam Mahtani.
Mahtani, who manages the F&C Global Emerging Markets Portfolio and is deputy manager of the F&C Emerging Markets OEIC said emerging markets have fallen by some 15 percent since the peak in July but he believes they are likely to rally back quickly once confidence returns thanks to increasing domestic demand.
The portfolio focuses on those economies where there is strong domestic demand and where there are internal dynamics for growth, including Korea, Brazil, India, Thailand and Egypt.
“After struggling in the shadow of rising household debt for several years, the Korean economy is showing signs of recovery as improved employment and wage growth allow consumers to pare down some of their debt and increase their spending,” says Mahtani.
But the investment opportunities from rising consumer demand are not limited to Korea. According to Mahtani, in recognition of rising consumer demand the Indian Government has committed some $300 billion to infrastructure projects over the next five years.
Elsewhere, both Thailand and Egypt present great value opportunities. The political turmoil in Thailand following the military coup last year has raised concerns amongst investors, including F&C, over the country’s future but a transition back to a democratic elected government is widely anticipated over the next 12 months.