He said the longer term growth story for EM remained intact, as the currency crisis was likely to blame for the recent contraction in equity markets.
"Unfortunately, just as earthquakes do not know how large they will become when they start, it is impossible to accurately guess where the equity retreat will end. It could well last several weeks and include sharp reaction rallies, which may catch out the unwary," he said.
He added the huge levels of passive investment sales suggested the "babies [were] being thrown out with the bathwater" as emerging markets shouldn't really be seen as a homogenous sector.
Buying opportunity
The record emerging market ETF outflows seen in January have thrown up stock picking opportunities by the "indiscriminate" selling, he said.
More than $7bn left the asset class during the month according to Bloomberg – the highest level since their inception.
In addition, many of the stocks were priced in local currency, which have been hit by investor panic, therefore adding to their appeal for any investors pulling out of western currencies.
"Diversification, risk control, and margin for error are at their most valuable in times such as these, as markets seem more vulnerable, rightly, than they have been in the last year or two. Investors cannot avoid being hit by sharp falls in prices from time to time, but the trick is in being sufficiently diversified to be able to temper the size of these falls, even take advantage of them and build more long term value into your portfolio," he concluded.
