Eyeing Asian and emerging markets
They come with both opportunities and risks, but key factors for investors to note are Chinese policy, clarity on US Fed moves and the greenback's strength.
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THE final quarter of last year witnessed another bout of underperformance in Asian and emerging equity markets versus global markets. Part of this was due to the strength in the US dollar and the impact of the fall in the oil price on oil producing emerging market countries.
As we expected, Asia ex-Japan outperformed Latin America and Eastern Europe, and Japan unhedged. Although Asia ex-Japan ended up flat in US dollar terms, there were good returns made in a few of our favourite markets, namely India, Indonesia and the Philippines. These returns were offset by negative returns in Japan unhedged, South Korea and Malaysia.
What last year highlighted again is that country selection matters in Asian and emerging markets investing. One of the main reasons for this is that those countries who have reform agendas are seeing higher returns than those who don't.
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