Bringing you live news and features since 2006 

Emerging markets still hold remarkable growth potential, says HSBC Global Asset Management

RELATED TOPICS​

HSBC Global Asset Management has outlined potential areas of strong growth and opportunities to improve returns in volatile emerging market (EM) assets, in its investment outlook for Q2 2014.

The company’s Investment Quarterly sets out how HSBC assesses each EM country individually, rather than the class as a whole.
 
The EM sell-offs in 2013 and early 2014 created huge volatility as managers exited indiscriminately.
 
The sell-offs of EM assets have been necessary to reveal a more realistic picture of the economic conditions within the sector, which will likely see further volatility in the short-term but offer attractive long-term fundamentals for savvy investors.
 
Hervé Lievore, senior macro and investment strategist at HSBC Global Asset Management, says: “The EM space is not homogenous, either in terms of financial performance or economic fundamentals. So when assessing the outlook for EMs, identifying external and internal imbalances is crucial in deciding which countries still have strong growth potential above the wider EM mix.”
 
The principal factor that has caused volatility over the past 12 months was largely due to external imbalances, Lievore suggests. EM economies were relying on unstable external capital flows due to two key reasons. Firstly, Western countries had to address substantial external deficits following the global financial crisis due to excess domestic demand, which stifled inflows into EM markets. Secondly, as EM currencies appreciated over time from Western investment, competitiveness was gradually eroded.
 
Lievore adds: “The sell-offs can be seen as a reassessment of risks after a period of relative complacency, a negative side-effect of extremely loose monetary policies. Some EM countries are looking to rebalance external imbalances by raising policy rates, such as in India, Turkey and Brazil, to depress domestic consumption and reduce the strength of their currencies. This approach reduced India’s current account deficit from USD21 billion in Q2 2013 to USD5 billion in Q4.”

Latest News

ETF data consultant ETFGI reports that assets invested in the global ETF industry reached a new record of USD12.71 trillion..
Calastone has published an ETF white paper which examines several of the processes that take place across the lifecycle of..
Adapting product lines to fit into changing methodologies and meet shifting demand is essential to remaining relevant in the industry..
Investors urgently need greater access to diversified investment strategies aligned with the Paris Agreement on climate change if the world..

Related Articles

Taylor Krystkowiak, Themes ETFs
Themes ETFs opened its doors in December 2023, with an introductory suite of 11 ETFs – seven thematic and four...
Konrad Sippel, Solactive
At the end of March, financial index specialist, Solactive, published its 2024 annual report on future trends.  ...
Lorraine Sereyjol-Garros, BNP Paribas
Following changes to the French Monetary and Financial Code and of the French market authority AMF’s General Regulation, it is...
Ed Rosenberg, Texas Capital
Texas Capital Bank first opened its doors back in December 1998 and nowadays offers wealth-management services, as well as commercial,...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by