Jpmorgan Emerging Market... Share Discussion Threads

[loganair] 26/12/2015 12:43

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.

[loganair] 20/12/2015 10:52

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.

[loganair] 04/12/2015 12:32

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.

[loganair] 22/11/2015 18:52

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.

[gilston] 18/11/2015 18:31

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.

[topvest] 06/6/2013 16:30

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.

[peterbill] 13/9/2010 20:53

Quiet on this thread ... share price keeps going up :-) ... I've got the sub shares (they are ISAable) which have done rather well over the last year or so. Best result in my ISA.

Where we are talking of a double dip in the UK ... the emerging markets don't seem to have the same view.

any others holding the sub shares?

[ben gunn] 17/3/2010 12:46

glen
Their exam sylabus tells them to recommend 5%.
Its just as silly as the 5% in cash (primarily there to pay exessive fees and charges)

[glentimon] 06/2/2010 11:35

As an aside I am increasingly iritated by pundits/advisers saying you should have a proportion of your your investments in emerging markets, often at a figure as low as 5%!
If you put yourself in the place of a resident investor in say china, india etc, I would guesss you would certainly be investing somewhere nearer 80% of your funds in local economies, and might be saying to yourself "UK stocks, burgeoning deficit, recession - avoid".
I think "emerging economies" is a misnomer, and am happy to have 80% or so invested there via well managed investment trusts.
Yes they are more volatile, but given the current prospects for the £, our and europe's economy, I think this is a rational decision.

[andrbea] 14/1/2010 10:43

hi glentimon
I'm pleased with my purchase of jmgs so far
know of any other subshare for emerging markets, in regions where you envisage high growth?

[glentimon] 16/7/2009 16:42

In my move to investment trusts rather than straight company shares this is a core holding in the Family's ISAs, along with JPMs China & Russian trusts, though I've gone for New India IT rather than JPM. I'm taking the view that growth will be centred in large young & growing poulations. Throw in some ILH, HHI, HDIV for income, EWI & SMT, FPEO, for diversity, and there you have it.
I'm tempted by SHD for income and large discount but have to be convinced we won't see a second UK dip.

[peterbill] 07/7/2009 20:40

Not much posted here ... have an order in for subscription shares, JMGS - they seem to be ISA'able.

Any holders here?

Director bought today so that should be positive :-)

[knowing] 27/9/2007 10:12

Chart looks super.

[apetley] 27/9/2007 10:03

Have to admit I am surprised at how quickly this has rebounded after plumbing the depths in August. Almost as if nothing ever happened.
Almost as good as JMC and JII. Great bounce backs.

[Abuse team] 03/4/2006 16:32

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[contrarian2investor] 03/4/2006 16:31

thanks for reply oxford blue. Happy hunting.

[oxford blue] 20/3/2006 16:43

c2i: utilico

[contrarian2investor] 20/3/2006 16:24

Thanks for the reply easy74 & oxford blue.

What exactly is UIL, I have not come across that before. I will be holding JMG for the long-term.

C2I.

[oxford blue] 20/3/2006 12:43

Yes, I'm very interested in Emerging Markets - why this fund as opposed to any other, though? JPF are good at these trusts and the monthly information is very good too. I'm keeping my eye on this one, mind.

I'm out of JRS at the moment and have moved into UIL which I find very interesting indeed - solid, with immediate prospects in growth areas all around the world.

[easy74] 20/3/2006 12:08

I asked oxford blue to open the JMG thread up....been a holder in the past and looking to get back in again.

BTW....oxford Blue can be founf on the JRS thread.

[contrarian2investor] 15/3/2006 18:35

oxford blue :
Nice start to the FBB, HOWEVER YOU DIDN'T MAKE ANY COMMENTS. Is this because you are not a holder. I have held these for over 12 months and the slight set-back will not hinder these long-term. The emerging markets (BRIC) will outpace the general market over the next 10 years and beyond. IMO

TIA
C2I

[oxford blue] 09/3/2006 14:08

Emerging markets are here to stay, so come dancing ...!