Bringing you live news and features since 2006 

Announcement

Distressed emerging markets too cheap to ignore, says Kames Capital

RELATED TOPICS​

Emerging market equities and bonds have reached such distressed valuations that they now present a buying opportunity for investors, according to Kames Capital’s Chief Investment Officer Stephen Jones (pictured).

While the group has been underweight emerging markets for the majority of 2015 because of the headwinds facing the asset class, Jones says the company’s funds had been increasing their exposure back to a neutral position in recent weeks.
 
“The valuations on emerging market equities have got to a point where they now look attractive,” he says. “Emerging markets have become distressed in terms of their prices, and while the headwinds from a strong US dollar and slowing global growth remain, the bad news is largely in the price now.
 
“A neutral position on emerging market equities is the sensible place to be in Q4 and then investors need to reassess next year, taking into account data from the US which will dictate when interest rates rise.”
 
As well as increasing its exposure to emerging market equities, Kames’ has also become more positive on hard currency emerging market debt.
 
“In a similar vein, spreads on some of the hard currency bonds have become too attractive to ignore, and so there has been an opportunity to increase our exposure there. Being underweight at these levels is too expensive now.”
 
Jones says with US growth slowing, it may mean that interest rates remain lower for even longer. Therefore, equities in general look attractive, especially after the recent pullback across most markets.
 
“We are overweight equities as a house, as valuations are now at more attractive levels. Companies that can deliver earnings will continue to be rewarded,” he says. “However, this is a stock pickers market, and in the current environment investors need to be more discerning about what they hold, as falls of between 10-20% for individual companies delivering disappointing news are becoming more common.”
 
Jones says as well as increasing allocations to emerging markets, equity investors would be minded to look to Europe for opportunities as valuations on the continent look compelling.
 
“With quantitative easing continuing in Europe and growth offering the potential to surprise on the upside, it looks like one of the most attractive regions to invest in,” he says.

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