Italian managers confirm strong appetite for EM exposure

Despite a deceleration in the growth rate of emerging market economies, for Italian managers China and India remain investment destinations which come with high expectations attached.

“Even if it will be hard to replicate the very positive performance we had over the past months, in 2013 we retain a positive outlook on emerging markets,” said Matteo Bosco, Italy country head at Aberdeen Asset Management.

Speaking to industry body Assogestioni, Bosco said that in 2012 the performance of the emerging market bond sector was about 16%, “an impressive bull market.”

In 2013, returns are likely to be less relevant, even if emerging markets retain a strong appeal for Italian investors.

According to Gerhard Aigner, managing director of funds management at Raiffeisen Capital Management, looking ahead emerging equity will become increasingly relevant, both in absolute terms and in relative terms compared to developed markets.

Expectations are particularly strong on Chinese equities, which have been subject to good valuation.

Bosco advises managers to adopt a stock picking approach, selecting firms with a strong business case and interesting investment themes, such as infrastructures.

India and China, Raiffeisen added, still offer the most interesting opportunities. A-Shares, renminbi denominated shares of mainland China-based companies that trade on Chinese stock exchanges, such as the Shanghai Stock Exchange and the Shenzhen Stock Exchange, gained about 15% in December and this suggests a positive outlook for the future.

Emerging market currencies are also set to play a lion’s role in 2013. The Chinese renminbi, but also the Mexican Peso are leaving open the possibility of real appreciation.

Currency strategists have suggested that the outlook is also good for the Russian ruble and for the Polish sloty.

A full version of the article will appear in the issue 39 of the print magazine.

Investment Europe is hosting a ‘Fund Selector Bond Forum’ on March 5, in Milan – Click here to read the event’s details.

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