A portfolio manager discusses why she’s finding attractive investment opportunities in emerging markets in the aftermath of a prolonged period of slow growth and weak currencies.
Noriko Honda Chen: We think investing in emerging markets is attractive today. For the past several years, emerging markets had gone through slower growth rates, and we also had quite a lot of overcapacity in some industries due to quantitative easing and fiscal stimulus in those specific countries. We also had a number of emerging markets with pretty large current account deficits, and as they were working off those current-account deficits, those currencies had weakened.
Now we’re past that phase. We’re in an economic cycle where a number of the emerging markets are starting to grow again, albeit more slowly, and currencies have already weakened. So we do think that the current volatility has offered us investment opportunities.
We have seen that Mexico has been an interesting place for our analysts to look at. Valuations have come in a little bit, and there are some good companies there that have been consolidating, so our analysts are seeing some more interesting investment opportunities there.
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