search.noResults

search.searching

dataCollection.invalidEmail
note.createNoteMessage

search.noResults

search.searching

orderForm.title

orderForm.productCode
orderForm.description
orderForm.quantity
orderForm.itemPrice
orderForm.price
orderForm.totalPrice
orderForm.deliveryDetails.billingAddress
orderForm.deliveryDetails.deliveryAddress
orderForm.noItems
ETS


“As industries consolidate, companies with strongbalance sheetsand capabilities will benefit fromthese structural drivers,”headds, pointing to the long-termstructuralthemes of5G, digitalisation, the internet of things, risingfinancial penetration, healthcare, premiumisation andinfrastructure. “Overall,weviewthe current


environmentnot as a threat, but as an opportunity to increase our exposure to excellent-quality companies that arenowavailable at discounted pricesandweare selectively addinga fewvaluenameswherewefeel that the companies are trading substantially below their intrinsic values,” saysMrGala.


SPREADINGTHEGROWTH Insome respects, a healthier Chinese economy is clearly positive for emergingmarkets, says AlexWolf, head of investment strategy for Asia at JPMorgan PrivateBank, but it dependsonthe compositionof that growth. China has rebounded very quickly, predominantlydue to strong exports, as their factorieswere open whenmany across the globewere not,while the country is theworld’s largest producer of both personal protective equipment andelectronic devices—both ofwhichhave been in highdemandduring this period. “Thismeanstheir growth is


currently less complementary to otheremergingmarkets than in the past,” he explains. China generally boosts other emergingmarkets through commodityimports—in the pastwhen constructionwas booming, oil, ironore,andcopper importswould lift commodity producers. “However at themomentit’s less


of a boost and, going forwardas China transitionsaway from investment towardsdomestic


PWMNET.COM 67 VIEWFROMMORNINGSTAR


China’s rebound leaves clear leader


Emerging markets slightly underperformed developed markets in 2020. For the year-to-date to September 30, the MSCI EM index has returned 1.3 per cent in GBP terms, while the MSCI World index for developed country stocks has returned 3.9 per cent. That said, similar to most global


markets, there has been wide divergence in terms of investment styles. The emerging markets growth stocks, represented by theMSCIEM Growth index, returned 15.2 per cent year-to-date compared to a loss of 12.1 per cent for the emerging markets value stocks, represented by theMSCI EMValue index. Performance has been driven by a


handful of momentum growth stocks, namely Alibaba, Tencent and TSMC, each returning more than 40 per cent over this period. The fact that these stocks collectively make up 20 per cent of theMSCIEMindex has exacerbated their effect on the market. At the country level, China,which


led the initial sell off, has been a clear winner compared to other emerging markets, with theMSCI China index returning 19.3 per cent. Chinese equities outperformance has been drivenby the country’s ability to control the coronavirus spreadmuchbetter than some other economies,whichhas enabled an early economic rebound, while its status as a non-oil-exporting nation has helped aswell. Among theworst-hit emerging


markets has been Brazil, with theMSCI


Brazil index losing almost 40 per cent. The driver of marketweakness has been macroeconomic vulnerability, exacerbated by the impact of Covid-19. As expected, the growth-oriented


emerging markets strategies have outperformed the value-leaning ones. JPM Emerging Markets has been a standout performer. The strategy is led by Leon Eidelman with the quality growth approach, seeking to invest in companies that boast quality franchises, consistent earnings streams and solid returns on equity. Following strong relative performance and steady inflows, the strategy soft-closed in May 2020. Another leader has been Fidelity


Emerging Markets. The strategy benefits froma seasoned lead manager Nick Price, who has successfully managed this strategy since 2009, and is meant to provide exposure to Fidelity’s best emerging markets equity ideas. The manager primarily looks for quality growth firms that exhibit strong and sustainable returns on equity, good balance sheets and shareholder-friendly management teams. Conversely,Comgest Growth


Emerging Markets has struggled year-to-date. While the strategy also favours quality growth stocks, it is rather price-conscious and as such has avoided Chinese internet giants Alibaba and Tencent,which has hurt its relative performance. In addition, the portfolio has also remained invested in companies that can benefit from long-termdomestic growth despite strong macroeconomic headwinds, for example in Brazil and South Africa.


Lena Tsymbaluk, senior analyst, manager research,Morningstar


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76