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10 reasons for staying
cautious on emerging markets

2014 Nutmeg Saving and Investment Limited
“The decision in the US to reduce its bond-buying program, coupled with slow Chinese
growth, has caused a lot of uncertain...
1. Higher growth does not mean higher equity returns

2014 Nutmeg Saving and Investment Limited
2. Emerging markets enjoyed big tailwinds in the five years
before the financial crisis – it’s unlikely to happen again

2...
3. Growth in China,
a big driver of
emerging markets,
is likely to be
lower this decade
than the previous
10 years

2014 N...
4. Growth across the
range of emerging
market countries is
now looking weak

2014 Nutmeg Saving and Investment Limited
5. The outlook for commodity markets is poor

2014 Nutmeg Saving and Investment Limited
6. Restored
competitiveness in
developed markets
is now increasing
competition and
therefore damaging
emerging markets

20...
7. Structural issues
have not been
resolved in many
emerging markets exchange rates
versus the US
dollar are declining

20...
8. Emerging
markets are cheap
compared to 20032007 but not
compared to the
past 20 years

2014 Nutmeg Saving and Investmen...
9. One emerging market equity market is not like another

2014 Nutmeg Saving and Investment Limited
10. Investors are only now starting to review emerging
market allocations, so a further sell-off may be coming

2014 Nutme...
2014 Nutmeg Saving and Investment Limited
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10 reasons why you should remain cautious on emerging markets and focus on developed market equities in 2014

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Nutmeg's chief investment officer, Shaun Port, explains why his investment strategy for Nutmeg's customer portfolios' remains cautious on emerging markets and oriented towards developed market stocks.

"The decision in the US to reduce its bond-buying program, coupled with slow Chinese growth, has caused a lot of uncertainty in emerging markets in recent months. With the valuations of emerging market stocks falling, some investors actually see it as a good time to invest in them, but our view remains that the inherent risks far outweigh any small pockets of good value that may exist.
We decided to sell our emerging markets investments in June last year and our customers’ portfolios are more oriented towards developed market equities. In 10 charts, here’s why we think it’s prudent to remain wary of emerging markets as a whole right now…"

Published in: Economy & Finance
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Transcript of "10 reasons why you should remain cautious on emerging markets and focus on developed market equities in 2014"

  1. 1. 10 reasons for staying cautious on emerging markets 2014 Nutmeg Saving and Investment Limited
  2. 2. “The decision in the US to reduce its bond-buying program, coupled with slow Chinese growth, has caused a lot of uncertainty in emerging markets in recent months. With the valuations of emerging market stocks falling, some investors actually see it as a good time to invest in them, but our view remains that the inherent risks far outweigh any small pockets of good value that may exist. At Nutmeg, we decided to sell our emerging markets investments in June last year and our customers’ portfolios are more oriented towards developed market equities. In 10 charts, here’s why we think it’s prudent to be wary of emerging markets as a whole right now…” Shaun Port, Chief Investment Officer, Nutmeg February 2014 2014 Nutmeg Saving and Investment Limited
  3. 3. 1. Higher growth does not mean higher equity returns 2014 Nutmeg Saving and Investment Limited
  4. 4. 2. Emerging markets enjoyed big tailwinds in the five years before the financial crisis – it’s unlikely to happen again 2014 Nutmeg Saving and Investment Limited
  5. 5. 3. Growth in China, a big driver of emerging markets, is likely to be lower this decade than the previous 10 years 2014 Nutmeg Saving and Investment Limited
  6. 6. 4. Growth across the range of emerging market countries is now looking weak 2014 Nutmeg Saving and Investment Limited
  7. 7. 5. The outlook for commodity markets is poor 2014 Nutmeg Saving and Investment Limited
  8. 8. 6. Restored competitiveness in developed markets is now increasing competition and therefore damaging emerging markets 2014 Nutmeg Saving and Investment Limited
  9. 9. 7. Structural issues have not been resolved in many emerging markets exchange rates versus the US dollar are declining 2014 Nutmeg Saving and Investment Limited
  10. 10. 8. Emerging markets are cheap compared to 20032007 but not compared to the past 20 years 2014 Nutmeg Saving and Investment Limited
  11. 11. 9. One emerging market equity market is not like another 2014 Nutmeg Saving and Investment Limited
  12. 12. 10. Investors are only now starting to review emerging market allocations, so a further sell-off may be coming 2014 Nutmeg Saving and Investment Limited
  13. 13. 2014 Nutmeg Saving and Investment Limited
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