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Investment views

What can past market regimes tell us about the next chapter for emerging markets?

12 February 2019
Authors: Mike HugmanPortfolio Manager, Peter EerdmansHead of Fixed Income and Co-Head of EM Sovereign & FX

With the US economy cooling and interest rates approaching a likely peak, a new cycle in emerging markets is drawing near. How should investors approach it? In a new paper we offer this suggestion: abandon your preconceptions. That’s because the next cycle is likely to differ from any that have gone before.

We believe that after a long period of rebalancing, valuations of emerging market assets look attractive

The paper takes a deep dive into the previous two economic cycles in emerging markets and considers what lessons they hold for investors.

We believe that after a long period of rebalancing, valuations of emerging market assets look attractive. For investors with an understanding of the risks, an appropriate time horizon and realistic expectations, we regard this as an attractive entry point and a good time to reassess existing allocations.

As it says on nearly every investment publication, ‘past performance is no guide to the future’. Investors whose views on emerging markets are anchored in either of the last two cycles would do well to pay particular attention to those words as a new economic regime approaches.

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The value of investments, and any income generated from them, can fall as well as rise.
Emerging market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.


Important information:

This material is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. All of the views expressed about the markets, securities or companies reflect the personal views of the individual fund manager (or team) named. While opinions stated are honestly held, they are not guarantees and should not be relied on. Investec Asset Management in the normal course of its activities as an international investment manager may already hold or intend to purchase or sell the stocks mentioned on behalf of its clients. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This content may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Actual results may differ materially from those stated herein.
All rights reserved. Issued by Investec Asset Management, issued February 2019.

Mike Hugman
Mike Hugman Portfolio Manager
Peter Eerdmans
Peter Eerdmans Head of Fixed Income and Co-Head of EM Sovereign & FX

The content of this page is intended for investment professionals only and should not be relied upon by anyone else

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