Invesco Canada blog

Insights, commentary and investing expertise

Emerging markets: No shortage of reasons to be cautious in 2019

Key takeaways

  • Emerging Markets (EM) face high uncertainty due to US equity market volatility and trade wars.
  • Yet we believe EMs as an asset class looks attractive as they are quite undervalued.
  • Quality has been out of favor in the EM markets in 2018, but we anticipate a reverse to the mean in the near future.

Emerging markets are one of the few asset classes where informational inefficiencies provide a fertile ground for bottom-up stock pickers (i.e., active investors) to add value. In our opinion, demographics, technology, decreased reliance on commodities and globalization all provide visible long-term growth potential.

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Waterfront, tourism

U.S.-China spat underscores value of investing in quality


November 9, 2018
Subject | Invesco | Macro views

There was news out last Friday that U.S. President Donald Trump has directed his cabinet to start crafting a new trade agreement with China.1 With my focus on emerging markets, this is welcome news, as the trade dispute between the world’s two largest economies has cast uncertainty over the markets.

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Investing in emerging markets: Multinationals vs. local


March 29, 2018
Subject | Active management | Institutional

I am often asked why an investor should invest in local businesses in emerging markets instead of putting their money in large multinational companies. For example, why invest in Amorepacific Corp., a Korean cosmetics company, over Revlon, a multinational that derives a portion of its revenue from sales in emerging markets? This is a fair question, and as a long-term global investor, I will outline my thoughts on it in this blog post.

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When geopolitical tension creates opportunities


March 19, 2018
Subject | Active management | Macro views

Whether it’s nuclear tensions on the Korean peninsula, revolution in the Ukraine, the Brexit vote in the U.K. or an unpredictable legislative agenda from the Trump administration, there is no shortage of geopolitical issues for investors to consider. However, for us as long-term investors, the question is: When do these stresses create buying opportunities?

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Emerging markets as a source of corporate revenue


February 9, 2018
Subject | Active management | Macro views

As you may well know by now, Trimark portfolio managers are not macro investors. We don’t spend our time formulating top-down macro views. Instead, we research individual companies to find those that we believe offer the best return potential.

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Discipline in action: Two companies we like and why


November 7, 2017
Subject | Active management

I think it’s important for advisors and investors to truly understand a portfolio manager’s approach, and the best way to do that is to see the discipline in action. In my last blog post, Why EM? Why now? I presented my case for emerging markets and reviewed my approach to investing in these regions. Today, I will discuss two companies we’re invested in, why they made the cut and how they have performed for our investors.

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Why EM? Why now?


October 27, 2017
Subject | Institutional

I’ve said it before, and I’ll say it again: I believe investing in emerging markets (EM) is best done using a truly active approach. Performance numbers tell one part of story – I’ll cover the numbers a little later in this post – but other elements of the “why active in EM” story are: managing risk, long-term growth potential, and understanding complex and unfamiliar local markets.

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Why EM? Why now?


October 19, 2017
Subject | Active management

I’ve said it before, and I’ll say it again: I believe investing in emerging markets (EM) is best done using a truly active approach. Performance numbers tell one part of story – I’ll cover the numbers a little later in this post – but other elements of the “why active in EM” story are: managing risk, long-term growth potential, and understanding complex and unfamiliar local markets.

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Three ways we manage risk in emerging markets


June 5, 2017
Subject | Active management | Institutional

Many investors perceive emerging markets (EM) as a risky place to invest their money. Visions of faraway places with different approaches to business, regulation and governance can be intimidating, but the reality in many EM countries is very different today than it was just twenty years ago. In this blog post, I’m going to discuss the three main ways our funds differ from others when it comes to managing risk and maintaining a strong risk/return profile for our EM investments.

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Old EM vs. new EM

For many investors, the category emerging markets (EM) brings to mind a few key characteristics that I now associate with the “old EM”, which in my experience differs dramatically from the current reality in many emerging-market countries – what I refer to as the “new EM”. What has changed?

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3 reasons for active management in EM

Now that passive index strategies are ubiquitous across markets, I am pleased to see that the overall active vs. passive debate is over, replaced by a more nuanced discussion about where each approach makes sense in an investor’s portfolio. I am of the firm belief that emerging markets is an investing space in which active management is not only preferred, but in most cases, vital. Here are my three main reasons why.

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Putting out fires at Samsung


October 24, 2016
Subject | Active management

Samsung Electronics Co., Ltd. has dominated tech and business media recently with news it was recalling its Galaxy Note 7 phones. Product recalls such as this are not unheard of, but the combination of safety concerns, the popularity of the product and the ongoing battle for mobile phone dominance made this case headline-worthy. Samsung is a top-ten holding in two of the funds I manage – Trimark International Companies Fund and Trimark Emerging Markets Class (as at September 30, 2016). Here is my view on the business impact of the recall and how we are approaching our weightings in the funds.

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Emerging markets: The “trade of a decade”?


March 18, 2016
Subject | Active management | Institutional

In a recent Bloomberg article, Research Affiliates LLC called emerging markets (EM) “the trade of a decade.” The article noted that long-term investors are currently presented with an “exceptionally cheap” opportunity, as the MSCI Emerging Markets (EM) Index has declined 30% over the past three years.1

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Chinese stock markets plunge, we buy


August 27, 2015
Subject | Active management | Institutional | Macro views

As China’s markets dominate headlines and many investors are concerned about the ripple effects of the weakness, I believe the current correction is a natural market movement that provides an opportunity to build on our portfolios at attractive prices.

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Focus on quality shields Trimark funds from China’s A-share rout

When an extremely inflated stock market valuation combines with reckless financial leverage, what would be the final consequence? The freefall of China’s A-share market in the past three weeks provides an answer: a decline of more than 30% for the Shanghai Stock Exchange Composite Index, with thousands of shares losing far more than that.

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Acrobats, jugglers and a 263%* return


May 7, 2015
Subject | Active management

Last month, Fosun International Ltd. was part of a consortium that agreed to purchase Quebec-based circus and entertainment behemoth Cirque du Soleil. Fosun is the top holding in Trimark International Companies Fund and Trimark Global Fundamental Equity Fund and a top-ten holding in Trimark Fund and Trimark Emerging Markets Class (as at March 31, 2015).

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Short-sighted investors make China a land of opportunity


February 9, 2015
Subject | Active management | Macro views

With Shanghai-Hong Kong Stock Connect, China recently opened its huge domestic capital markets to international investors. The program allows foreign investors to purchase shares of Shanghai-listed companies on the Hong Kong Exchange.

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