Emergentes: las mejores oportunidades y sectores

Matthieu Genessay, gestor de H2O - Sabado, 26 de Agosto

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Why are Emerging Markets attractive? Best opportunities and favorite sectors Since the second half of 2016, investors have become more and more constructive on EM assets. Expectations of higher commodity prices have also been part of the rationale to invest. Looking forward to the summer recess in investment flows, the time has come to reassess EM risk in the context of now well exposed investors. This is the reason our view is particularly cautious on hard currency debt where expected returns are not attractive due to the high correlation with US Treasuries. Local debt markets offer more value but only on countries offering potential central bank easing like Mexico.

H2O is expecting volatility on the downside on EM equities. Opportunities are more interesting on EM local bonds offering a high carry with a volatile FX market but stable over a medium-term investment horizon.

 

On EM equity markets, our view is bearish through a negative exposure to the MSCI EM. The valuation appears expensive and we believe that a potential appreciation of the USD could trigger outflows before the end of the year due to higher funding costs. The sectors which are the most attractive are the ones less correlated to a hawkish FED. Services and innovation offer a better asymmetry compared to sectors related to commodities and production.

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