DeVere’s international investment strategist Tom Elliott said first, as developed markets approach or pass old highs, the valuation discount of emerging stock markets has become more compelling.
Second, QE tapering has not resulted in higher US Treasury yields and more expensive borrowing costs for emerging market countries. Elliot notes that the persistent low yields on Treasuries is a mystery, but it is nevertheless a ‘fact on the ground’ that supports risk assets.
Elliot’s third factor is the easing of political uncertainty. He noted Russia has not invaded Ukraine; India has voted in Mr Modi, an economic reformer with a strong mandate, and China has shown itself willing to step in to prevent the collapse of large savings trust companies, while bad debt coming from Chinese property-related companies and banks has been very limited.
“There’s been a considerable jump in interest from our clients regarding investment opportunities in emerging markets over the last two months,” said chief executive Nigel Green. “Our independent financial advisers in every global region in which we operate report that a growing number of clients are now actively expressing a keen focus on emerging markets,” he added.
Green said that judging by the increasing amount of interest shown by his clients in this area, confidence is back to where it was around the first quarter of 2013 when the asset class was still enjoying significant popularity.
