“The second half of last year saw strong performance in particular from consumer discretionary stocks, as well as Chinese internet-related stocks and Macao gaming names.”
Technology as a sector continues to be a driver in emerging markets, said Price.
“The likes of Indian outsourcing company Cognizant Technology Solutions have benefited from a weaker Indian rupee and having a cheaper cost base. We also like internet stocks like Naspers and Baidu. Smart phones will take off in poorer emerging markets, and the content providers like Baidu are the winners here.”
Education sector
Within the consumer discretionary sector, Price highlights stocks such as New Oriental Education & Technology, a leading Chinese education company which he describes as a restructuring story.
“Within consumer discretionary we’ve been finding more stocks at better valuations. Our overweights will remain in consumer, IT and healthcare.”
The major underweight in his portfolios is in financials, with stocks such as Turkish bank Turkiye Halk Banksi negatively impacted by tapering, the unsustainable financial situation in the country and political influences.
Fragile five
At a country level, Price has been cautious about his exposure to the so-called ‘Fragile Five’ of Brazil, India, Indonesia, South Africa and Turkey, which look most vulnerable to US tapering. At the same time, though, his approach remains bottom up, talking to companies about doing business in their regions.
“There is an opportunity to pick up some good franchises in Turkey, for example, with attractive stock and currency valuations. We’re not overly concerned about the tapering effect. You have to put it into context and a large portion is already reflected in currencies. We’re buying into strong franchises which offer good total shareholder returns, be it from dividends or compounding earnings growth.”
