Funds with US$3t taking a rain check on emerging market stocks

London

RICH pickings will be hard to find in emerging market shares next year.

That's the conclusion of most money managers as they see off the third successive year of declines that took stock prices to the lowest level in a decade relative to their developed peers and shaved more than US$4 trillion off their value in the last six months alone.

A combination of dollar strength, domestic political turmoil and lower prices for metals and oil is driving investor caution. Ten out of 12 multi-asset managers overseeing a combined US$3 trillion said in a Bloomberg survey that they will either maintain or cut holdings in developing nation equities in 2016.

"Emerging markets will continue to be a drag on global growth," said Michael Kelly, who oversees US$12.9 billion as managing director and global head of asset allocation at Pine-Bridge Investments LLC in New York. "While valuations have been beaten down, fundamentals will continue to deteriorate,"…