Investors are yet to fully take advantage of the opportunities emerging market equities can bring to portfolios. Market conditions are suitable, and valuations are compelling, according to Navin Hingorani, portfolio manager at Eastspring Investments, who says the two criteria that investors need in order to generate alpha are cheap valuations and ‘unloved’ companies.

“The starting point for emerging markets in terms of valuations and in terms of positioning is really compelling. Emerging markets are currently cheap, trading at a 65 per cent discount to the US, and investor positioning towards the emerging market is almost in a trough.”

Historically, emerging market outperformance against developed markets has happened in environments of a falling US dollar, expanding growth differentials between emerging and developed markets (DM), and increasing CAPEX.

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Eastspring Investments

Founded in 1994, Eastspring Investments is a wholly-owned subsidiary of Prudential plc. Eastspring Investments (Singapore) Limited serves as a global hub for Eastspring Investments’ asset management business. Its deep understanding of Asian markets, paired with global perspectives, enables the firm to develop and deliver unique investment solutions for investors.

Information provided is general information and is for educational purposes only, and does not include, or constitute as, financial product advice.