| China has consistently toward a key player in the global economy |
|
|
|
|
Whether the recent increases in emerging equity markets are likely to take longer? Although optimistic about the potential for further increases, we must remember that the markets remain subject to increased volatility and remain under its influence for some time. This means that we can expect both increases and decreases. Therefore, we must pay attention to the valuation of long-term prospects and profitability of enterprises increases to prevent the acquisition or maintenance of overpriced shares after recent massive increases. The current valuation does not seem unreasonable, given that they are below the five-year average levels. Equity funds in emerging markets once again began to take notes on the influx of investors who, in the second quarter reached a record high 26.5 billion dollars. Do you think that emerging markets will continue to attract capital investors? Overall, we expect a steady stream of capital funds, although we continue to witness increased volatility. We can not expect positive movement of capital each month or each week, but the trend is generally positive. During the first seven months of 2009, net capital inflows (based on weekly data from www.emergingportfolio.com) reached a total of 34.5 billion dollars. It's more than 85% of the estimated U.S. $ 40 billion of capital, which sailed from the fund in 2008. What causes this phenomenon? Capital inflows were boosted by increased investor confidence in emerging markets, appetites for more profits, more hunting for undervalued by the market, the company and - most importantly - an attractive valuation of companies in emerging markets. Where in the area of investment in emerging markets do you see now the most attractive? Because it is usually possible to find at least a few good opportunities in every market, all regions of the emerging markets look attractive. We have the largest exposures in Brazil, Russia, China, India and South Africa. From the viewpoint of individual sectors, commodity shares seem attractive, because the odds of many of them have fallen below their intrinsic value, and we expect continued growth in global demand for raw materials in the long term. Positive trend can also see the consumer market. Projections of profitability of enterprises from the market is optimistic, due to rising per capita income and an ever greater demand for goods. The World Bank recently announced that a limited inflow of capital from the export of the country by citizens working abroad and foreign direct investment outlook is increasingly serious problems for the economies of developing countries. Do you share this point of view and whether you perceive, therefore, any reason to worry? As far as economic forecasts, the World Bank is usually a bit behind. Economists tend to look in the rearview mirror instead of against each other. While the limited inflow of capital from the export of the country by citizens working abroad and foreign direct investment may have an adverse impact on emerging markets, we expect that the impact would be offset by the inflow of resources from consumption and expenditure on infrastructure, which should enable markets to achieve economies are positive. This applies particularly to such markets as China and India. Are you still an optimist when it comes to the Asian market (excluding Japan)? For which the market would have you out the best recommendation? Yes, Asia's largest emerging markets region in the world, Asian countries are developing relatively quickly. They include, for example, China and India, characterized by very large populations, rising incomes and rapidly developing citizen to capital markets. Economic increases in these countries remain at a relatively high per capita income rising, valuations remain attractive and security reforms are being carried out, which improves the business environment and investment in the region. We have the largest exposures in China, India, South Korea and Thailand. What is your opinion about the BRIC countries? Are they a good option for investors? Yes, we believe that long-term prospects for the BRIC markets are optimistic. BRIC countries are the fastest growing economies in the world. What's more, foreign exchange reserves in all four countries remain at high levels. BRIC countries are more than 40% of world population. The increase in domestic demand in these markets is also powerful. Despite the global slowdown, China and India are still registered a significant positive increases in economic, and China has consistently toward a key player in the global economy. It is estimated that economic growth in China in 2009 will reach about 8%, and the country's foreign exchange reserves have exceeded U.S. $ 2 trillion. Moreover, such countries as Brazil and Russia have large reserves of natural resources, and in spite of declines in commodity prices from recent peak levels in the longer term we expect the upward trend, and these countries will see tangible benefits from global demand for oil, steel, aluminum, pulp and other raw materials. Commodity prices recently went up sharply, which have a positive impact on the economies of emerging markets. How do you assess the prospects for commodity markets? The outlook for commodity markets are optimistic. Strong demand from emerging markets coupled with less elastic supply may result in future increases in commodity prices. Overall, we expect the trend in the long term, but certainly not the way we avoid the downward correction. A number of emerging markets is not only a key supplier, but also big consumers of different materials. For example, Brazil is one of the world's largest iron ore suppliers, Russia is the largest supplier of natural gas, etc.. Moreover, given that emerging markets resides most of the world's population, do not be surprised as to a large potential demand for raw materials in those countries. These conditions warrant so much attention commodity market. |
| Next > |
|---|