Posted May 24, 2014 7:10 pm by Comments

In a lengthy article for FE Trustnet, Tom Walker, manager of the Martin Currie Global Portfolio Trust, warns that investors should be very wary of buying back into supposedly cheap emerging markets because economic headwinds, poor corporate governance and high valuations plague the quality stocks you might want to buy. He also warned that “it’s dangerous looking at market averages,” adding:

“Emerging markets are very challenged at the moment and they are at a different point in the cycle from the rest of the world and are seeing inflation and higher interest rates where the developed world is seeing disinflation and low interest rates. They are having to deal with higher interest rates while exporters are struggling and inflation in asset prices is a particular issue.”

In addition, Walker commented:

“We are seeing deflation in Europe, a consumption tax will cause a slowdown in Japan, emerging markets are not significantly large domestic economies to stand on their own two feet and the US economy is down every second quarter. Yellen says maybe QE will end in 2015? 2015 is still very long time away, and this economy is not robust enough. We won’t get out of QE for another three to five years. In fact I don’t see how we do come out of it, we are so far into it.”

It should be noted that the Martin Currie Global Portfolio Trust has returned 148.12% during Walker’s tenure (starting in January 2000) against 69.33% for the FTSE World.

To read the whole article, Don’t be lured back into “cheap” emerging market funds, warns Martin Currie, go to the website of FE Trustnet.

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