Collings says China’s loose monetary policy and fiscal spending – leading to
an upgrade in its GDP to 8 per cent – coupled with improving data in the US,
shows this is more than a dead-cat bounce.
He also says key structural factors such as lower household debt and
developing capital markets are likely to result in the emerging markets
driving global growth in the next decade, while a re-rating of the sector is
warranted as it would further drive outperformance.
Collings, who says the team currently favours Russia, Indonesia and Brazil
alongside China, urges a degree a caution following the recent rally, with
the MSCI Emerging markets index up 54.1 per cent since the low of October
He says: “We embraced the recent irrational volatility in emerging markets
and this boosted fund performance. But normality now appears to be returning
as investors begin to re-appreciate the fundamental appeal of the asset
class. We have, therefore, taken some risk off the table despite remaining
bullish in the longer term.”