Emerging markets are home to the world’s fastest-growing economies and their long-term equity returns have attracted investors. In the past several years, however, many investors may have been disappointed by lacklustre results from their emerging markets allocations. This session argued that investors should look to companies with strong secular growth to find alpha in emerging markets.[vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Sara%20Moreno%22%2C%22job_role%22%3A%22Managing%20director%2C%20emerging%20markets%20PM%20and%20healthcare%20specialist%2C%20Jennison%20(United%20States)%22%2C%22content%22%3A%22Sara%20Moreno%20is%20an%20emerging%20markets%20equity%20portfolio%20manager%20and%20research%20analyst.%20She%20joined%20Jennison%20in%202011.%20She%20previously%20spent%20three%20years%20with%20Loomis%20Sayles%20as%20a%20research%20analyst%20where%20she%20covered%20stocks%20in%20Latin%20America%20and%20emerging%20Eastern%20Europe%2C%20the%20Middle%20East%2C%20and%20Africa.%20Prior%20to%20Loomis%20Sayles%2C%20she%20worked%20at%20Citi%20Global%20Markets%2C%20Goldman%20Sachs%2C%20and%20Moody%E2%80%99s.%20She%20received%20a%20BA%20in%20economics%20from%20Bryn%20Mawr%20College%20and%20an%20MBA%20from%20the%20University%20of%20Chicago.%22%2C%22image%22%3A%2244366%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fsara-moreno-70aa57%2F%22%7D%2C%7B%22name%22%3A%22Mark%20Walker%22%2C%22job_role%22%3A%22Chief%20investment%20officer%2C%20Coal%20Pension%20Trustees%20(United%20Kingdom)%22%2C%22content%22%3A%22Mark%20Walker%20is%20chief%20investment%20officer%20of%20Coal%20Pension%20Trustees%20Services%20(CPT)%2C%20the%20in%20house%20executive%20responsible%20for%20the%20%C2%A321%20billion%20of%20investments%20of%20the%20Mineworkers%E2%80%99%20Pension%20Scheme%20and%20the%20British%20Coal%20Staff%20Superannuation%20Scheme.%5Cn%5CnPrior%20to%20joining%20CPT%2C%20Walker%20was%20managing%20director%20and%20global%20chief%20investment%20officer%20of%20the%20Univest%20Company%2C%20Unilever%E2%80%99s%20internal%20investment%20group.%20The%20Univest%20Company%20oversees%20the%20investments%20of%20Unilever%E2%80%99s%20pension%20plans%20in%20over%2040%20countries.%20Walker%20joined%20Unilever%20from%20Mercer%20where%20he%20was%20a%20partner%20and%20head%20of%20the%20London%20investment%20consulting%20unit.%5Cn%5CnWalker%20has%20over%2025%20years%20of%20experience%20in%20actuarial%2C%20pensions%20and%20investment%20work.%20He%20is%20a%20Fellow%20of%20the%20Institute%20of%20Actuaries%20and%20a%20member%20of%20the%20300%20Club.%22%2C%22image%22%3A%2244367%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fmark-walker-9b115a42%2F%3ForiginalSubdomain%3Duk%22%7D%5D” title=”Speakers” el_class=””][vc_quotes layout=”accordion” quotes=”%5B%7B%22name%22%3A%22Colin%20Tate%22%2C%22job_role%22%3A%22Chief%20executive%2C%20Conexus%20Financial%20(Australia)%22%2C%22content%22%3A%22Tate%20has%20been%20an%20investment%20industry%20media%20publisher%20and%20conference%20producer%20since%201996.%20In%20his%20media%20career%2C%20Tate%20has%20launched%20and%20overseen%20dozens%20of%20print%20and%20electronic%20publications.%20He%20is%20the%20chief%20executive%20and%20major%20shareholder%20of%20Conexus%20Financial%2C%20which%20was%20formed%20in%202005%2C%20and%20is%20headquartered%20in%20Sydney%2C%20Australia.%20The%20company%20stages%20more%20than%2020%20conferences%20and%20events%20each%20year%20%E2%80%93%20in%20London%2C%20New%20York%2C%20San%20Francisco%2C%20Los%20Angeles%2C%20Amsterdam%2C%20Beijing%2C%20Sydney%20and%20Melbourne%20%E2%80%93%20and%20publishes%20five%20media%20brands%2C%20including%20the%20global%20website%20and%20strategy%20newsletter%20for%20global%20institutional%20investors%20conexust1f.flywheelstaging.com.%20One%20of%20the%20company%E2%80%99s%20signature%20events%20is%20the%20bi-annual%20Fiduciary%20Investors%20Symposium.%20Conexus%20Financial%E2%80%99s%20events%20aim%20to%20place%20the%20responsibilities%20of%20investors%20in%20wider%20societal%2C%20and%20political%20contexts%2C%20as%20well%20as%20promote%20the%20long-term%20stability%20of%20markets%20and%20sustainable%20retirement%20incomes.%20Tate%20served%20for%20seven%20years%20on%20the%20board%20of%20Australia%E2%80%99s%20most%20high%20profile%20homeless%20charity%2C%20The%20Wayside%20Chapel%3B%20and%20he%20has%20underwritten%20the%20welfare%20of%2060%2C000%20people%20in%2028%20villages%20throughout%20Uganda%20via%20The%20Hunger%20Project.%22%2C%22image%22%3A%2244341%22%2C%22linkedin%22%3A%22https%3A%2F%2Fwww.linkedin.com%2Fin%2Fcolin-tate-839a5a181%2F%22%7D%5D” title=”Moderator” el_class=””][vc_empty_space height=”10px”]
Key takeaways
A poll of delegates finds over 50 per cent of attendees are not currently skewing their emerging market allocations to China in a new show of caution.
An active approach to investing in emerging markets where investment is focused on bottom-up opportunities in companies exposed to secular growth reaps rewards.
Investors are less focused on market cap and more focused on a split between regions. If investors only look at equity market cap as a signpost to future growth opportunities, they are likely to be disappointed.
Looking at the data, carbon emission intensity in emerging markets comes particularly from China; China is bigger than other markets.
Digital transformation at ground level in emerging markets is driving opportunities. It is also behind financial inclusion across populations excluded by the traditional banking sector.
China led the revolution, using e-commerce to increase inclusion and allowing companies to market directly to consumers.
One of the most important secular growth trends in China is in healthcare where the aging population is also wealthier, with money to spend.
Regarding investment in private equity in China, the biggest risk is permanent loss of capital. Investors should focus on individual investments at a micro level.
Emerging economies are no longer export led. For sure, Chinese growth has fuelled commodity, export-led demand in many emerging economies but now the emerging markets need to focus on local growth.
Is your emerging markets allocation skewed towards China?[vc_line_chart x_values=”” values=”%5B%7B%22title%22%3A%22No%22%2C%22y_values%22%3A%2256%22%2C%22color%22%3A%22blue%22%7D%2C%7B%22title%22%3A%22No%20but%20plan%20for%20it%20to%20be%22%2C%22y_values%22%3A%2211%22%2C%22color%22%3A%22pink%22%7D%2C%7B%22title%22%3A%22Yes%22%2C%22y_values%22%3A%2230%22%2C%22color%22%3A%22blue%22%2C%22custom_color%22%3A%22%2350485b%22%7D%2C%7B%22title%22%3A%22Yes%20and%20want%20to%20increase%20that%20skew%22%2C%22y_values%22%3A%224%22%2C%22color%22%3A%22sandy-brown%22%2C%22custom_color%22%3A%22%2375d69c%22%7D%5D”]
The big difference between the vaccine rollouts and the scale of the stimulus measures across the world could result in a K-shaped global economic recovery, with much of the developed world booming but poorer countries continuing to struggle. However the
This session examined the proposition that we are in a “lower for longer” environment, explored whether a reflationary environment will prevail, and determined if growth is around the corner.
This session examined how the digitalization of economies and the shift to renewable energy offer potential long-term growth opportunities in infrastructure; and how it can play a role in long-term investor portfolios.
Is distressed an indicator of public market activities. Given the recovery in markets, what does that mean for the opportunity in distressed? Will we see a divergence in the bond and equity markets? What are the regional differences and where are the opportunities?
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