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Share Name Share Symbol Market Type Share ISIN Share Description
JP Morgan Emerging Markets Investment Trust LSE:JMG London Ordinary Share GB0003418950 ORD 25P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 878.00p 876.00p 878.00p 881.00p 875.00p 880.00p 129,138 16:35:03
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Equity Investment Instruments 0.0 18.6 13.4 65.5 1,083.17

JP Morgan Emerging Markets Inves Share Discussion Threads

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Avoid US stocks: Emerging markets is where to put your money in 2019, says Morgan Stanley: Stocks in emerging markets have had a rough year but are tipped for a turnaround, according to Morgan Stanley, which predicts stable growth in those economies in 2019. The investment bank has upgraded emerging market stocks from “underweight” to “overweight221; for the new year, while US equities were downgraded to “underweight.” “We think the bear market is mostly complete for EM (emerging markets),” the bank said in its Global Strategy Outlook report for 2019, adding: “We are taking larger relative positions and adding to EM.” Many investors withdrew from emerging markets throughout 2018 and bought more assets in the US due to a spike in bond yields. That will change, says Morgan Stanley, explaining that emerging markets will outperform developed markets. Within the emerging markets space, Morgan Stanley’s key “overweight221; countries are Brazil, Thailand, Indonesia, India, Peru and Poland. The bank classes Mexico, the Philippines, Colombia, Greece and the United Arab Emirates as “underweight.” Growth across EM has been forecast to slow slightly from 4.8 percent to 4.7 percent in 2019, before inching back up to 4.8 percent in 2020. US growth will moderate from the 2.9 percent estimates to 2.3 percent in 2019 and 1.9 percent in 2020, Morgan Stanley said. “A major challenge for US assets next year is that they’re ‘boxed in’ – better-than-expected growth will simply mean more Fed tightening, while weaker-than-expected growth will raise slowdown risks, with limited scope for policy support,” its strategists wrote. “In a major change from the last 10 years, both good news and bad news creates problems for US markets.”
Investment trust awards 2018: Best emerging markets trust - Winner: JPMorgan Emerging Markets Investment Trust JPMorgan Emerging Markets Investment Trust (JMG) is one of the largest global emerging market trusts and it boasts highly competitive NAV total returns over three, five and 10 years. Its costs are reasonable and it deserves to trade on a tighter discount than the 10 per cent its board tends to defend. The trust’s universe has expanded hugely since Austin Forey became manager in 1994. In particular, it now includes far more technology-based businesses and Chinese ‘A’ shares (issued by companies traded on mainland China exchanges rather than in Hong Kong). Forey says there are now more A shares than quoted companies in all other emerging markets combined, and that choosing them correctly is critical to success. JPMorgan is well placed for the challenge, as it started expanding its emerging markets research team 12 years ago. Having merged this with its Asia research team and added 10 China-focused analysts, the team is now more than 30-strong, split between London, New York, Singapore and Hong Kong. Forey asks the team to forecast how firms will develop over at least five years and what compound returns they might produce. His favourite metric is the dividend yield, on the basis that companies can’t manipulate this. He explains that ‘companies that are growing their dividends faster than average tend to have higher returns on capital’. Forey has concentrated JMG’s portfolio down to 62 holdings, which must have been difficult, as he likes to run his winners indefinitely. ‘The holdings you keep the longest tend to go on working,' he says. His largest country weightings are China, India, South Africa, Brazil and Taiwan. The trust’s largest sector weightings are to financials and technology.
By Maike Currie of Fidelity: Bull markets climb a wall of worry and blips along the way are normal. In equity markets, these types of corrections can in fact be quite healthy and a good time to scoop up investments at discounted prices. Key reason to believe the party isn’t over: emerging markets. After Trump’s election there was a lot of angst about the future of emerging markets - largely because of two reasons: trade and tapering. Many emerging markets are export driven economies reliant on global free trade. Many of these countries have built their wealth by supplying the huge appetite of the American consumer. Trump’s ‘Buy American’ rhetoric raised concerns over emerging markets vulnerability to American protectionism. The other big concern centred on a stronger dollar. With rising rates and the tapering of ultra-loose monetary policy likely to lead to a strengthening of the American currency, emerging markets with dollar denominated debts or those dependent on commodities, looked particularly vulnerable. But the opposite has played out. Since the Federal Reserve’s interest rate hike announcement, the US dollar has been weaker while the market has pressed the pause button on the merits of Trump’s reflationary promises. What does this tell us? Well, crucially that the power of central banks in developed markets to drive up asset prices is fading and that emerging markets aren’t nearly as worried about tightening monetary policy in the developed world than the once were (remember the tantrum emerging markets threw in 2013 just at the mention of the word ‘taper’)? . And here’s the rub: investors may be turning cautious, but they’re not shunning emerging markets, typically regarded as one of the most risky investment classes. In fact flows into emerging market funds are at their strongest on record, according to data from Morgan Stanley, while emerging market asset classes make up six of the 12 best performing asset classes so far this year. Moreover, as Ayesha Akbar, a portfolio manager in Fidelity’s multi asset team, highlights there are also a number of longer term structural factors which favour these regions. In most emerging markets, people have seen rising living standards over the past 20 years, whereas in the developed world many have witnessed stagnation. This alienation with many feeling shutout from the so-called establishment, has been a key driver behind the rise of populist parties across the world, and indeed the election of Donald Trump. Emerging markets can always make their economies more productive to boost growth but this solution is not always as readily available to developed economies. Not only is there less room for ‘catch-up growth’ but these types of reforms tend to be more politically difficult, with the potential to uproot the status quo. Even the most traditional area of emerging market risk – politics – is now seen as less of a threat with countries like China and India making good progress in promoting a more stable economic and political backdrop. Compare this to the political clouds hanging over the developed world - Trump, Brexit, European elections and even a second Scottish Referendum. As investors we like to think of the investment world as neatly split between ‘safe’ developed markets and ‘risky’ emerging markets - but perhaps now is the time to rethink this. Yes, Donald Trump remains an unknown quantity and this is why we have witnessed these recent market jitters. But if you take a more holistic and long term look at the world, and how it’s changing, it probably doesn’t matter that much.
Why investors should stick with emerging markets: Alex Wolf, senior emerging economist at Standard Life Investments, said the conditions which began the sector’s recovery last year are largely still intact. This comes despite investment veterans warning that Mr Trump’s policies could wipe out the healthy returns which emerging markets enjoyed last year. Yet across both commodity and manufacturing exporters, the upswing in activity has continued. Emerging market fund group Ashmore posted a huge 94 per cent rise in pre-tax profits last year, despite seeing outflows of $700m (£558m). Mr Wolf pointed out that manufacturing levels have improved in both India and across the ASEAN region last month, while Brazil’s trade and production data has been stronger than expected. Yet he said the biggest piece of the emerging market equation, China, does not post reliable data until after the Chinese New Year. “Although there is little to derail the EM recovery in the near term, the outlook remains highly uncertain,” he said, adding the factors that drove economic and market performance of the sector are now at risk of receding. Flows into emerging markets had previously been boosted by stronger-than-expected Chinese demand, stronger external demand from the US and Europe, a stable dollar and interest rate environment, and a rebound in the global tech cycle. “With industrial growth set to slow in China and the Fed continuing to hike rates, the supportive environment could begin to show cracks.” At the moment, conditions in emerging markets look positive, but the Standard Life economist said the biggest question is sustainability. “Potentially damaging US policies and an unclear Chinese industrial outlook leave emerging market growth hanging in the balance.” He also said investors seldom predict the outcomes of geopolitical events, or draw the correct conclusion for asset price movements. “This is not usually because of a lack of knowledge, but because they are attempting to delineate other people’s emotional reaction to an event that has not yet happened. “ He claimed the “only rational answer” is to focus on the long-term, pointing to Morningstar analysis which indicates that emerging markets have a positive yield and pay-out growth rate going forward.
Atradius reveals the worlds top emerging markets: Leading economists from trade credit insurer Atradius have released their assessment of the world’s top emerging markets of 2017.The new economic report reveals that India, Indonesia, Kenya, Côte d’Ivoire, Peru, Chile and Bulgaria are the global leading emerging market economies (EMEs) to watch. According to Atradius, these economies have been boosted by higher yields, reduced concern surrounding a hard landing of China’s GDP growth and a stabilisation of commodity prices. Despite mounting uncertainty in 2017, these markets are predicted to weather global volatility due to strong domestically-driven growth, favourable demographics and supportive policy. Each market is dominated by young, growing populations, marked by an expanding middle class which boosts consumption and increases demand for investment and imports.Meanwhile, policymaking in these EMEs is largely improving and these markets generally enjoy stable political and institutional conditions. Indonesia, Peru, India and Côte d’Ivoire particularly are undertaking business-friendly reforms. Best performing sectors: Food: New long-term opportunities can be found in Bulgaria thanks to rising demand and a fragmented food market. Meanwhile, Kenya and Peru are also experiencing increasing demand for imported food and beverages. Chemicals: India’s chemicals imports are growing substantially with a positive outlook as industrial activities grow. Higher industry and household demand is also rising in Bulgaria where 80 per cent of chemicals are imported. Construction: Demand for infrastructure and investment growth are fuelling opportunities in all of the top EMEs largely thanks to a variety of large government infrastructure projects. Retail: Good prospects and growth are forecast in the retail sector in Côte d’Ivoire, Chile and Peru. India anticipates a boost in rural incomes which will drive demand for consumer goods. Richard Reynolds, head of regional brokered sales at Atradius, says, ‘The combination of strong consumption, investment-led GDP growth, increasing populations and improving policymaking offer attractive opportunities within these emerging market economies. James Marchant, co-founder and CEO of Just Opened, says, ‘The experience economy is a global force, supported by a wealth of exciting and vibrant locations. It’s culturally curious consumers throughout the world who are drawn to locations such as these. With the EU amounting to 10% of the world’s population, it makes sense for British businesses to look beyond the continent for opportunities and new customers. ‘Asia for example has a huge population with a strong consumerist culture making it an ideal fit for many businesses, not just those working in the experience economy. Businesses therefore have a lot to gain by looking beyond the European horizon, particularly in terms of growth prospects.’
Carlos Hardenberg portfolio manager of Templeton Emerging Markets Investment Trust: India's corporate governance has come a long way. The financial industry at large has generally recognised India as a model of good corporate governance in the emerging markets realm, and there has been a marked increase in transparency by many listed companies. China is the other behemoth of emerging markets. Its economy is undergoing a dramatic transformation from investment- to consumption-driven growth, and that is going to have tremendous implications for every part of its economy. China's economic transition, along with the incredible economic growth already experienced, has resulted in a much larger economy, and its influence today on even highly developed markets is immense. Cautious on China: In general today we are cautious on China and very selective in our stockpicking. We think the Chinese have the ability to manage their economy at this stage - they have a lot of resources and are managing their currency - but we are concerned about the banking sector in China. We are worried about the transparency of the banks, as some of the accounting numbers we are getting are questionable. We are also concerned about the shadow banking system. We think the Chinese will be able to handle that process, but that the adjustment phase will take some time. As we look back at the development of emerging markets over the past two decades, it's interesting too to consider the emerging markets of tomorrow. We expect many of these to come from the current crop of frontier markets, many of which are growing rapidly and quickly assimilating the latest technological advances, particularly in the areas of mobile finance and e-commerce. Generally, more youthful and growing populations mean consumer power is on the rise and the middle class is growing rapidly. However, these smaller markets are being ignored in general by global emerging market investors, partially because of liquidity problems there and partly because they are misunderstood. There is a lot of potential in Africa, but also in some of the smaller Asian countries. Reasons to be upbeat: Looking back over the past 21 years, we believe the welcoming of foreign capital and the trend towards privatisation have been key to the growth and development of emerging markets. We are conscious and concerned that in some countries there is evidence that those trends could be reversed, but we remain upbeat today about the potential emerging markets offer, for three main reasons: • Emerging markets in general have been growing three to five times faster than developed countries. Many frontier markets have seen even higher growth. • Emerging markets generally have greater foreign reserves than most developed countries. • Emerging markets' debt-to-gross domestic product ratios are generally much lower than those in developed markets. Put all these strengths together, and there is good reason to be optimistic about the future for emerging and frontier markets. We are confident their share of the global investable universe will continue to grow.
arja - Except for JP Morgan Global Emerging Markets Income Trust at a discount to Nav of just 1% their Asian, Brazil, China, India and Russia trusts are all running a discount to Nav of around 15%.
quite a big discount to NAV - is it warranted ?
EMERGING MARKET RESILIENCE: Objectively, EM economies are rapidly becoming the only 'normal' countries left on the planet, in the sense that they have regular business cycles, use conventional policies, have reasonable debt burdens, sensible asset price valuations and so forth. Moreover, EM countries have recently demonstrated considerable resilience. They have just come through a hurricane of headwinds - the start of the Fed hike cycle, the US dollar rally, the taper tantrum and falling commodity prices - without a major pickup in defaults. EM resilience is rooted in fundamentals that are quite simply much, much stronger than those in developed economies, in regard to debt levels, FX reserves, growth rates, demographics, the room to ease monetary policies and fiscal room. EM economies are reforming far more than developed economies, especially in the last few years. In short, the conditions of vulnerability that make Fed policy changes such an important risk in developed economies are simply not present in EM. EM asset prices have also become far less correlated with Fed fears. By contrast, sensitivity to Fed hikes in developed market bonds is not only higher but has been growing steadily since last year. This relationship alone ought to be a clincher for those who still struggle with the Fed hike question. But if that is not enough, remember that EM bonds also pay 6.26 per cent yield for the same duration that in the US pays just 1.26 pe cent and which in Germany pays -0.51 per cent.
Emerging markets recover, but now for the hard part by Michelle McGagh: Emerging markets have been strong performers this year, but now earnings need to improve, say investment trust managers. Emerging markets have only entered the first leg of a recovery and company earnings need to improve before a genuine turnaround can take hold. Emerging markets have had a rocky few years but investments trusts focused on the sector are among the best performers of 2016. Shares in these trusts have risen 31% on average since the start of the year. The outcome of the EU referendum in June provided a further boost to emerging market investments as the value of sterling fell, however, it is only just the start of the recovery. Carlos Hardenberg, manager of the Templeton Emerging Markets investment trust, said the ‘pendulum was swinging back’ in favour or emerging markets. Shares in the trust are up 42.8% this year, making up all the ground lost in a torrid 2015. Hardenberg took control the fund from veteran emerging market manager Mark Mobius last September. ‘The market always over reacts when the general consensus turns negative,’ said Hardenberg. ‘Share prices are more volatile than underlying earnings. We are seeing industrial production, as a measure of recovery, increasing in emerging markets...if you go country by country, there is a healthy degree of orders. ‘GDP growth is slowly improving and over the next two years markets like Russia and Brazil will see the biggest relative improvements.’ Omar Negyal, manager of the JPMorgan Global Emerging Markets Income trust, targets income rather than capital growth in his fund and said the real recovery in emerging markets will have begun when company earnings stabilise. ‘What we are seeing in emerging markets is the first leg of recovery,’ he said. ‘China is stabilising and there is an improvement in trade balances in emerging markets. For the second leg [of recovery] to come through, earnings have to start to improve. We are at the start of that,' he said. He said improved earnings would help the ‘rerating of high yield equities in the asset class’. China has been the main problem for emerging markets, with slowing growth dragging the sector down. Hardenberg holds 19% of his trust in the country. He said there were still concerns around housing and ‘over capacity in steel and cement that will have to be dealt with in future’. ‘The big negative for emerging markets is the overall impact of global uncertainty and demand and supply in commodity markets,’ said Hardenberg. Former chief economist at the International Monetary Fund Ken Rogoff has also warned of the threat China poses to the global economy due to its high levels of debt. He said there was ‘no question’ that ‘China is the greatest risk’. ‘China has been the engine of global growth,’ he said. ‘China has been really important. But China is going through a big political revolution. And I think the economy is slowing down much more than the official figures show,’ he said. However, the good news is that sentiment towards other emerging markets is becoming more positive and local emerging market currencies are ‘slowly recovery’ and companies are finally keeping ‘capital expenditure down and concentrating on cost management’, said Hardenberg. Emerging companies in mid and small cap - there are more opportunities there,’ said Hardenberg, adding that many tech companies - of which he has been a fan - were ‘leap-frogging’ more established businesses. In particular, Hardenberg said he looked for companies ‘that have sustainable business models in an area with a high barrier to entry’. ‘We are expecting that emerging markets will see a sideways development over the next 12 months and there is a clear risk from China...and there is some danger already priced in,’ he said. Although Asia is the largest geographic weighting in his trust, Hardenberg said he did not ‘have exposure to Chinese banks or insurance companies’ because of their poor asset quality and concerns the companies were ‘hiding how they are restructuring’. China is the concern for Negyal, whose trust has mounted a recovery almost as impressive as Templeton's this year, with the shares up 38.6%. ‘China is very important for emerging markets at a quarter of the asset class and for the rest of the emerging markets it is vital... because it drives the rest of the emerging markets via trade links,’ he said. ‘That’s commodity prices in Latin America or manufactured goods in the rest of Asia. There are very few emerging markets that are isolated from China. From an economic perspective, Latin America will benefit from stabilisation [in China].’ Also important for Negyal is for emerging markets ‘to re-enter growth territory’ to ensure companies can continue to pay dividends. ‘Emerging market dividends and earnings have been under pressure,’ he said. ‘The near term outlook for dividends is still a concern and it is something we want to be cautious about but in the mid and long-term growth opportunities can be seen as well,’ said Negyal.
Is this turnaround time for emerging markets? by Graham Smith, Market Commentator: It isn’t the picture we had at the beginning of this year. Back then, emerging markets were reeling from heightened concerns about China’s economy and currency as well as a plunging oil price. After several years of poor performance, emerging markets were certainly not at the top of investors’ shortlists. How this summer has changed all that. A tide to lift all ships, borne of an increasingly sanguine view of US interest rates, better news out of China and a generally more stable performance from commodities, has manifested itself in a sizeable rally. Data out last week showed Chinese industrial output increased at a 6.3% annual rate in August while retail sales rose by 10.6%. Not bad for an economy still in the throes of a protracted readjustment process. Such things are important for the world’s commodity producing developing countries – from Brazil through South Africa to Russia – and arguably even a comfort to big energy consumers like India, that have no interest in a world where confidence has been shaken by too-low an oil price. In fact, confidence may have been the biggest winner this summer. The world recovered from June’s Brexit vote seemingly none the worse off – though these are early days – and expectations about US interest rates seem to have receded from multiple rises this year to perhaps one or none. Higher rates in the US are an anathema to emerging markets. If they lift the value of the US dollar, they also inflate the size of the dollar debts held by emerging market borrowers. Not only that, they encourage global investors looking for higher quality and lower risk returns to allocate more funds to US dollar assets like Treasuries. However, government bond markets are not what they used to be. With yields across great swathes of the bond universe negative and with prices falling in major markets like the US and Japan this summer, “safe” assets suddenly look less safe with unattractive income returns to boot. The latest available data suggests the return to emerging markets is on, with sales of European funds investing in emerging markets reportedly rising in July to its highest since 2013. Yet while the big picture today is of returning confidence and improved returns from formerly out-of-favour sectors like commodities, if ever there was an asset class suited to a bottom-up, stock-picking approach over the longer term, this has to be it. Underdeveloped markets with growth potential attract entrepreneurs keen to shake up incumbents or create new markets with ideas drawn from the west. Compared with the rest of the world, the principal asset emerging markets have on their side is their growth advantage. It could also be that, in recent years, investors have paid a bit too much attention to US monetary policy. That was the case certainly in 2013, when the so-called “taper tantrum” saw billions of dollars withdrawn from emerging markets. The last time US interest rates were rising though – in the period 2003 to 2006 – emerging markets were rising with them4. Admittedly, the world still had a seemingly relentless China growth story to go on back then. However, the implication is that, so long as rising interest rates coincide with healthy growth, they might not be quite as bad for emerging markets as our very recent experiences would suggest. Emerging markets may have enjoyed a positive summer, yet you might not know it from their valuations alone. The nice surprise in these days of valuations tending to the high end of their normal ranges for developed markets, is that emerging markets look attractively valued, especially in view of their expected growth rates. At the end of last month, the MSCI Emerging Markets Index traded at just 15 times the earnings of the companies it represents, and at a 25% discount to world markets generally. The valuation gap is more or less maintained when using forecast earnings – 12 times for emerging markets versus 16 times for the world. So investors today can buy into the long-term growth emerging markets provide for less than the price of slower growth in the west, the trade-off being the higher risks associated with countries with lower credit ratings and the likelihood of volatile episodes to test the nerves. Whether or not China devalues its currency again remains a particular possible catalyst to volatility. However, if the International Monetary Fund is right – it expects emerging markets to grow by about 4% to 5% every year for the next five years – then 2016 could turn out to have been an attractive entry point for long-term investors looking to supplement the growth profile of their portfolios.
I have been looking at this and JP Morgan Global Emerging Markets Income trust (JEMI). JMG for me India and South Africa makes up far to high a percentage of the trust while the same can be said China/Taiwan and South Africa in JEMI. I would also like to see one or two frontier countries included.
Its likely that China will fade back later this year and take emerging markets with them. THe recent chart shows 4 or 5 downdays, of course there could be a bounce. I'm watching this Fund's chart but that's all for now.
Its likely that China will fade back later this year and take emerging markets with them.
Are emerging markets really in a “sweet spot”? Emerging markets were the greatest investment opportunity of the last decade, and arguably the most disappointing of the current one. The MSCI emerging markets index has now fallen in four out of the last five years, and dropped a thumping 14.92% in 2015. This is likely to excite the attentions of investors who like to dive into burnt-out sectors before they fire back into life and the bargains have all gone. It has certainly excited my attention, as has the 15% rise in the FT Trustnet global emerging market sector in the last three months. Fund managers are also jumping up and down, no doubt hoping the spotlight will start shining on this out-of-favour sector again. BlackRock reckons emerging markets are in a “sweet spot”. Should you sink your teeth in? Emerging market ETFs have attracted nearly $16bn this year to recoup 75% of their 2015 outflows, while short traders have been heading for the exits. Richard Turnill, global chief investment strategist at BlackRock, pins this on the weakening US dollar, a rebound in commodity prices and recovering Chinese economy. But he isn’t getting too excited, warning that emerging market valuations are no longer unambiguously cheap. Recent trends could reverse, Turnill adds, and a sustainable rebound would require evidence of structural reforms addressing excess debt, industrial overcapacity and low corporate profitability, particularly in China. This is the year that is: Other fund managers share his enthusiasm: Robin Geffen and James Dowey say that 2016 will be “remembered as the year you should have been buying emerging markets“. They warn that recent emerging market equities have seen several false dawns lately, with the sector surging at the start of 2015, only to be destroyed by the summer China crash. Today they favour China and Russia, and are steering clear of beleaguered Brazil. Many of today’s optimists appear to be pinning their hopes on the latest bout of Chinese stimulus, brushing over structural problems such as massive debt, huge surplus capacity, a housing bubble and very shadowy banking system. None of these problems have been solved and it may take another crash to do it. Emerging London stocks: That said, a Chinese and emerging markets recovery would be welcome news for oil and commodity stocks. It would also boost struggling FTSE 100 companies such as spirits giant Diageo, fashionista Burberry Group, emerging markets fund manager Aberdeen Asset Management, and Asia-focused banks HSBC Holdings and Standard Chartered. All have been punished by the emerging markets downturn but may benefit from a revival. Or you could try household goods giants Reckitt Benckiser Group and Unilever, which have shrugged off the downturn but may still cash in when emerging markets consumers are feeling richer again. There are signs of upward motion already, with Aberdeen up 26% in the last three months. Emerging markets have been in a sweet spot before, so let’s hope analysts aren’t over-sugaring this one.
by Daniel Grote - Turnaround for emerging markets? Will 2016 prove the year emerging markets finally recover? Stock markets in the developing world have been in the doldrums for three years now, and they have been the worst major market in which to hold your money over the last five. On the face of it, it’s difficult to see the signs of a recovery: the US has just begun raising interest rates, hiking the price of developing economies’ dollar debt and spurring investors to seek more secure returns in the world’s largest economy. But then, they are very cheap. Emerging markets trade on a price-earnings ratio, using projected 2016 earnings, barely in double figures, well below other global markets. ‘Emerging market valuations – in terms of price-to-book ratios – are relatively depressed versus history,’ said Ross Teverson, manager of the Jupiter Global Emerging Marketsfund. ‘At a time when valuations have been at or around these levels, strong long-term returns have often been available to investors willing to look beyond short-term headwinds.’ Nick Price, manager of the Fidelity Emerging Markets fund, pointed to depressed currencies and the subdued oil price as crucial to the plight of the sector. ‘2015 has already exhibited a high degree of currency depreciation of most emerging market currencies versus the US dollar,’ he said. ‘To this end, weaker emerging market currencies actually provide a tailwind for emerging market exporters. They make products and services derived from emerging economies more cost competitive, making them attractive in the face of hopefully improving demand as the global economy continues to recover.’ Exporters could also continue to benefit from the boost to global growth from a continuing low oil price, even though some oil-producing developing economies will continue to suffer. ‘Falls in commodity prices have not been bad for everyone,’ he said. ‘Take India, for example. As a net commodity importer, both the economy and the household have benefited from the impact of lower price inflation as the prices of fuel and food have fallen.’
30th November 2015 - Portfolio analysis by JP Morgan: The trust's share price and net asset value outperformed the benchmark. Stock selection in China was the main source of relative outperformance, reversing the trend of weak stock selection earlier in the year. Two of our largest overweights in China, Baidu and AIA Group, both outperformed. An overweight position in AIA Group, the pan-Asian insurer, contributed positively as the stock continued to rally on the back of strong earnings and an increase in new business. Our overweight exposure to South Africa was a significant detractor from performance for the second consecutive month, as the economy continues to struggle and the currency continues to lose ground against the US dollar. Stock selection in South Africa was also weak. Names in Mexico and Taiwan positively impacted returns. Names in Thailand detracted, as did a lack of exposure to Malaysia, which was one of few markets to see positive returns for the month.
Economists like Nouriel Roubini are warning that the emerging market economies still face a protected period of deleveraging and are vulnerable to adverse shifts in market sentiment. "The great emerging market debt binge of 2010-14 is over and the deleveraging process will continue in 2016," Roubini says. Among the emerging market economies, the BRICS – Brazil, Russia, Indonesia, China and South Africa – represented more than a quarter of the global economy in 2014, calculated on a purchasing power parity basis. China alone accounted for 16 per cent of world gross domestic product, while Russia and Brazil accounted for about 3 per cent each. "Reckoning with the aftermath of debt build-up – servicing the local and hard currency obligations amid more difficult financing conditions globally – will drag on growth, weaken currencies in the most affected countries and lead to debt/equity swaps, and scattered defaults." Even in China, where the government has the capacity to rescue the economy from a sharp correction, the process of deleveraging has the potential to be a drag on growth, particularly if the Chinese authorities limit the depreciation of the yuan. Economists say they might be constrained by fears of inflation, capital outflows, and the adverse effects of a lower exchange rate on the shift of resources from manufacturing to the services sector. They also might be sensitive to the effects of currency depreciation on American opinion in an election year. Brazil and Russia have been pushed into deep recessions: Brazil by falling commodity prices, weak macroeconomic management, declining competitiveness, corporate corruption and political scandal; and Russia by the collapse in oil prices and Western sanctions. Neither are in a good position to cope with the consequences of rising US interest rates. Indonesia and South Africa also are vulnerable because of low commodity prices and would be adversely affected by a reduction in the supply of foreign capital. South Africa, in particular, has been running large fiscal and current account deficits and has a rapidly rising public debt. Roubini also believes Turkey and Malaysia could come under pressure. "Even in our more benign scenario – no hard landing for China, stabilisation of commodity prices and smooth, gradual US Federal Reserve policy rate hikes – some emerging markets could still come under severe pressure, given macro imbalances, low policy credibility and political fragility," he says. The outlook for emerging economies is growing bleaker as the collapse in commodity prices weighs heavily on their outlook. Emerging markets have further to fall yet, highlighting that they are no longer the engines of global economic growth that they were once thought to be.
Prospects for Emerging Markets Aren’t as Bad as You’ve Heard: It’s obvious that emerging markets are facing severe headwinds. 2015 will be the fifth consecutive year of slowing economic growth. The days of break-neck growth in China are gone for good. Global volatility — coupled with strength of the U.S. economy — is making investors retreat to the safety of the U.S. dollar. A direct result has been depreciation in emerging market currencies. Since mid-2014, against the U.S. dollar, the Brazilian Real is down 42%, the Russian Ruble 46%, the Malaysian Ringgit 26%, and the South African Rand 22%. 2015 will be the first year since the 1980s to see capital outflows from the emerging markets exceed capital inflows. However, today’s events are not necessarily a good guide to longer-term trends. In analyzing the trajectory of emerging markets, it’s critical to look at the broader context in at least two ways. First, look at developments in the global economy. While the U.S. does remain very robust, the prospects for Europe and Japan are modest at best. Softer prices for oil and other commodities are a big boon to China and India, which together account for almost 40% of the world’s population. This means that, even in 2015, emerging markets will grow at twice the pace of developed markets. Even after factoring in currency depreciations, their share of the global economy continues to rise year after year. According to the IMF, in 2000 it stood at 21%. This year, it will be almost double — 40%. By 2020, it’ll be 44% and, by 2025, close to 50%. If you want growth, you have no choice but to engage with emerging markets. The other big reason for longer-term optimism lies in the major structural changes underway in emerging markets. The population is young. Africa is 10 years younger than the world average. India is nearly 20 years younger than Europe or Japan, and nearly 10 years younger than the U.S. This young population is becoming more literate, informed, ambitious, and entrepreneurial. It’s also more urban. By every measure, on every continent on earth (including sub-Saharan Africa), the quality of both governance and infrastructure is better than it was 10 years ago and getting better. To be sure, not every emerging market will flourish. But in the aggregate, they will account for half or more of the world economy in ten years. And, they’ll still be growing at 2-3x the pace of the developed markets.
After three years of disappointment, emerging markets are about to turn the corner, Goldman Sachs predicts. As growth picks up and weaker currencies help alleviate economic imbalances, “2016 could be the year emerging market assets put in a bottom and start to find their feet,” strategists led by Kamakshya Trivedi wrote in a note Thursday. “There is the prospect of improved growth and better returns, even if it is not a rerun of the roaring 2000s.” Some countries are better positioned than others. While South Africa, Colombia, Turkey and Malaysia still need to tackle their current-account imbalances, Russia, India and Poland are among nations that have improved enough for their assets to rally, according to Goldman Sachs. The New York-based firm is joining a handful of investors who have become more upbeat about developing economies after their currencies fell to record lows and stocks trailed developed-market peers by 51 percentage points over the last three years. Franklin Templeton has said the selloff has opened up buying opportunities not seen for decades. Goldman Sachs predicted that developing countries will grow 4.9% next year, from an estimated 4.4% in 2015, marking the first acceleration since 2010. While it is still below the long-term trend, the improvement can only help boost investor confidence given the current “widespread bearishness,” the analysts wrote. “We would part ways with the extreme pessimism that we sometimes encounter about the long-term prospects for emerging market assets,” they said. Goldman Sachs said the biggest risk is a “significant depreciation” of the yuan. A stronger dollar and slower growth in China may prompt policy makers to allow the currency to fall with a spillover effect rippling through emerging markets, the report said. “In our view, the fallout from such a shift is the primary risk,” the analysts said.
Share buybacks needed, with discount out at 11.2% against Board`s target of 10%. Share cap increased by 10m. shares issued for subscription shares last year.
Added a few of these on the sell-off. Looks a good performing trust on a long term basis and invested in the best markets to be. May go down further, but thought I would jump in now on a down "risk-off" day.
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