EM rally has room to run on reforms, AI and diversification, RBC BlueBay says
EEM•Fundamental support seen in multiple emerging markets
- BlueBay's head of emerging markets Polina Kurdyavko noted strong fundamental support in a variety of emerging markets.
- Among these, Nigeria's Dangote oil refinery has shielded the region from the worst of a global fuel price spike and reforms in Argentina and improved security in El Salvador have contributed to regional credit ratings in Latin America that are at their highest since 2016.
- In Asia, the AI boom is boosting economic growth in South Korea and Malaysia.
- Kurdyavko said Colombia, Turkey, Argentina, Mexico and Brazil were among the markets she viewed as offering the most promising opportunities for investors.
BlueBay sees opportunities across EM debt and equities
- BlueBay manages in emerging markets around $25 billion in equities and a further $16 billion in hard-currency, local-currency and corporate debt, making it among the largest asset managers in London in the asset class.
- "At this point in the cycle... within my risk bucket, should I be taking more risk within EM debt, high yield securitised, versus US equities? I think that makes a lot of sense," Mike Bell, head of market strategy with RBC BlueBay Asset Management, told Reuters.
- Bell pointed to the performance of US equities, and lofty valuations, while noting that Chinese stocks remained "pretty cheap" in comparison despite the nation's burgeoning industrial power in sectors from solar to automotive.
- "Should you have more in China and emerging market equities than in the US? No. But I think you can make a quite compelling case for saying you should have more in China than you have in European equities," Bell said.
