The Edge Economic Forum A better year for emerging market equities

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The Edge Economic Forum A better year for emerging market equities
Business & Markets 2014
Written by Levina Lim of theedgemalaysia.com
Monday, 10 March 2014 09:56

KUALA LUMPUR: Emerging markets may be going through some turbulence currently, but 2014 is going to be a better year for the stock market, said Geoff Lewis.

Lewis, executive director and global market strategist at JP Morgan Asset Management, Hong Kong, advised investors to hold on to their emerging market holdings instead of selling them.

“It’s going to be a year where developing economies will do better, and it’s going to be a year where the stock market continues to do well in developed economies.

“Don’t overpay for last year’s story. Don’t sell out all your emerging market holdings at these levels,” he said during his presentation on “The state of the nation and what it means for the stock market” at The Edge Economic Forum last Saturday.

Equity markets and currencies in emerging markets have been hit by negative news such as rising geopolitical risks, outflow of capital as the US tapers its quantitative easing programme and worries that China may be in for a hard landing as it undertakes structural reforms.

According to Lewis, emerging markets currently hold potential despite negative news headlines. “The kind of problems we find in the headlines now, emerging markets are a sell-off. But they are being viewed by our fund managers as a great bottom-up opportunity.

“They can see great value now in many of the companies they like,” he said, noting that emerging market equities as a group is trading at a price-to-book value of less than 1.5 times currently. This is a good opportunity for investors with longer-term horizons of about two to three years.

In particular, Lewis opined that investors should not underestimate the Japanese market. “It is a good time to go back into Japan … although there is very little optimism, we should not underestimate [the potential],” he said.


This article first appeared in The Edge Financial Daily, on March 10, 2014.