Italian managers eye emerging markets opportunities

Italian managers express growing interest in markets such as Turkey and Brazil, despite some concerns about headline GDP growth rates in the bigger markets such as China and India.

Despite a deceleration in the growth rate of emerging market economies, China and India remain investment destinations for Italian managers.

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

Speaking to Italy’s industry body Assogestioni, Bosco said the emerging market bond sector’s 2012 performance was about 16%, which he defines as “an impressive bull market”.

In 2013, returns are likely to be less impressive, although 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 equities 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.

Stock-picking approach

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’s Aigner adds, 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 around 15% in December 2012 and this suggests a positive outlook for the future.

Emerging market currencies are also set to play a key role in 2013. The Chinese renminbi and the Mexican peso have the possibility of a real appreciation. Currency strategists have suggested the outlook is also good for the Russian ruble and the Polish zloty.

For Italian players, it is not all about indirect exposure to these growth markets. A number of firms, such as asset manager Azimut, have invested to develop a presence in emerging markets to target the local client base.

In Turkey, Azimut has signed a joint venture with Turkish management firm Global Yatirim Holding. The JV is to launch three product groups: Target, Formula and Trend which include six different investment solutions aiming for absolute returns for both retail and institutional investors.

Azimut has similar plans in Brazil.

3.3bn consumers

If Italian potential investors needed any further convincing they should look at a recent report by Credit Suisse, which profiled consumer sentiment within the BRIC nations (Brazil, Russia, India and China) alongside those of Turkey, Saudi Arabia, Indonesia, and South Africa. Together, these markets represent over 3.3 billion consumers across the globe. 

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