Robeco: Emerging Markets - Volatilität birgt Kaufgelegenheiten

Today’s global financial markets were marked by great volatility. As for emerging markets, we expect this to continue for some weeks. Buying opportunities are emerging, though. 

Once the dust will have settled in a few weeks’ time, we might be in a situation in which US interest rates are no longer at zero, the Chinese economy is still expanding, albeit at a slower pace, and the Chinese currency is trading in a way that allows for a bit more market force. The latter is a good development in the long run, but adds to uncertainty in the shorter term. Emerging countries that buy a lot of - ever cheaper - commodities enjoy a much smaller bill for energy, copper, iron ore et cetera. This applies to countries such as China, India, Korea, Taiwan and Turkey. For now markets focus mostly on the exit and the ongoing market action is more reminiscent of a panic-driven final sell-off than the beginning of a structural bear market. Debt has been built up in Asia over the past few years but is not sizable enough to justify a crisis. Currencies are well supported by foreign reserves. Most countries in Asia don’t need foreign capital to sustain themselves thanks to current account surpluses.

Buying opportunities

The situation in large non-Asian emerging countries might be at its worst in Brazil and Russia withcommodity prices declining rapidly and political turmoil at a peak. We don’t know what the future holds butas top-down investors we do see good buying opportunities in markets like China, India and Korea. India, for instance, saves a staggering amount of USD 80 billion this year, with oil prices at USD 45 against over USD 100 last years. This is a lot of precious money the Indians can spend on infrastructure, education and health care instead.

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