A stronger US dollar and higher interest rates have put pressure on emerging markets, said Neuberger Berman multi-asset chief investment officer Erik Knutzen, but market movements since the US election have “resulted in fixed income yields and equity valuations that are more attractive than before”.
Mr Knutzen said a “robust long-term case for emerging markets” still existed, but cautioned investors not to treat them as “one monolithic block”, noting that shifting US policy will likely affect nations individually.
“Over the longer term, pro-growth US policy likely will benefit some markets while hurting others, mainly according to their economic focus,” he said.
“For example, any trade constraints pursued by the Trump administration would likely hurt Latin America far more than Asia, as it’s difficult to replace the value-add that Asian exporters bring to the table.”
Neuberger Berman president and equities chief investment officer Joseph Amato said emerging market investors should “tilt portfolios towards domestic companies trading at a reasonable price with low debt levels” to minimise their exposure to interest rate sensitivity and diminished global trade.
Read more:
ANZ expected to further divest Asian businesses
Trump’s trade policy could have a ‘negative outcome’
Sovereign wealth funds look to private investments
Netwealth reach record FUM, announce expansion
Asian liquidity improves in December, still high
