Peter Lowman, chief investment officer at Investment Quorum, believes we should be looking beyond the BRICs.
“As China’s economy slows, it is having the same issues and problems as the big western economies with property bubbles and debt ratios,” he says.
“The next stage in emerging market equity investing is the frontier markets. The likes of Templeton and Barings have fairly good frontier funds, but there is space for more.
“Once investors have loaded up with emerging markets, whether it be equity or debt, they will probably start looking to frontier markets again. It’s a natural screening process.”
Lowman adds: “I see this in companies in the ASEAN countries, such as in the Philippines and Indonesia, where expansions in healthcare, technology and energy requirements are benefiting innovative local firms. I think it is a stockpickers market here, as well as in the West.”
That’s not to say frontier markets have been delivering a great deal of outperformance, but certainly if there is to be a revival in the fortunes of developing world equities, then there is no point fooling ourselves into thinking it will be the exact same countries, sectors and, indeed, funds that will be the winners this time around.
After all, if something really is ‘emerging’ then by its very nature it is not standing still.
