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Sentiment on emerging markets down

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Investors shed their optimism on emerging markets in the second quarter, according to the latest Citywire db X-trackers Emerging Market Sentiment Indicator, sponsored by Deutsche Asset & Wealth Management.

In line with outflows from emerging markets in general, the Sentiment Indicator found that 41 per cent of fund managers surveyed believe emerging market equities will outperform global equities over the next year, down from 48 per cent in the first quarter 2013 survey.
 
The baseline for the recently introduced indicator is set at 1,000, with readings above 1,000 representing positive sentiment and readings below representing negative sentiment. The latest report shows sentiment sitting at 998.59, down from the 1,009 reading for the first quarter.
 
In addition, the latest survey found that 16 per cent of fund managers surveyed plan to increase their allocation to China over the next six months, down from 34 per cent in the first quarter 2013, while those planning to cut their allocation to the country has more than doubled, to 27 per cent from 12 per cent.
 
While 32 per cent of fund managers surveyed planned to increase their investments in India in the first quarter of 2013, this number fell to 13 per cent for the second quarter. Those planning to cut their Indian exposure went from 11 per cent in the first quarter to 26 per cent in the second quarter.
 
South Africa is the one emerging market country, out of 10 surveyed, to buck the trend, with 18 per cent of fund managers planning to increase allocations in the next six months, compared with 14 per cent planning to decrease their allocations.
 
Kai Bald, Deutsche Asset & Wealth Management’s head of public distribution, passive investments, says: “The latest sentiment report is in line with the ETF flows we saw in the second quarter. It is however a forward-looking indicator, and by tapping into the thoughts of the professional investment community investors can use it either to position themselves in line with that sentiment, or be contrarian and go against the grain.”
 
Deutsche Asset & Wealth Management also promotes the ETF range, db X-trackers, which provides a suite of emerging markets ETFs designed to provide investors with a high level of granularity so they can target particular countries, regions and sectors.
 
Investors can use db X-trackers to take specific exposure to the equity markets of a large number of emerging markets countries.
 
Simon Klein, Deutsche Asset & Wealth Management’s head of exchange-traded products, EMEA and Asia, global client group, says: “Now more than ever, as investors re-assess their expectations for the emerging markets based on new growth trends, having a wide choice of underlying exposures available will be critical. It means investors can really target their investments.”
 
The Citywire db X-trackers Emerging Market Sentiment Indicator is formulated independently by Citywire through the quarterly surveying of 100 professional emerging market asset managers who collectively control around EUR250bn of assets. The indicator is not designed to be an investable index, but to be used as a research and information resource.

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