Leading Investors See Need to Identify Specific Countries for Emerging Market Opportunities

Michael Hasenstab, manager of Franklin Templeton’s Templeton Global Bond Fund, says that some emerging markets present “not a once-a-decade, [but] a multi-decade opportunity to be buying very cheap assets.”  He continues: “We are not buying everything” but a “handful” of such markets “are diamonds in the rough.”  He identified the Mexican peso, Malaysian ringgit, and Indonesian rupiah as examples.

Other investment leaders are not so sanguine regarding emerging markets. Bridgewater Associates, headed by Ray Dalio, has said that the impact of emerging market losses is likely to be more widespread than the crises of the 1980s and 1990s because investors are now more heavily invested in them.  Viktor Shvets, head of Asian strategy for MacQuarie Securities, says the 1997 crisis is “not the right comparison” because “what’s happening right now is that emerging markets are somewhat less vulnerable from an external vulnerability point of view … but what we have right now is inability to grow.” He continued: “There is no growth, no trade, no liquidity, no cross-border finance, which means nothing is going to pick them up.” He concluded broadly: “There is no such thing as emerging markets anymore,” explaining, “there are countries, not emerging markets as a class. . . . The rising tide will not pick up all the boats.”