Ruchir Sharma, the head of emerging markets at Morgan Stanley Investment Management, has told CNBC (Are emerging market underdogs the best bet?):
“If you invest those economies which have done very poorly over the last five years, the prospects of future return are the highest. If you invest in those economies which have done very well over the last five years, the prospect for future returns are limited.”
Based on that logic, Sharma says the best risk-reward is likely to be found in emerging markets in Eastern Europe because “sentiment is still so beaten down and yet the balance sheets are in much better shape and the economic recovery is taking place.” Hence, he’s positive on Poland, Romania, Greece and the Czech Republic, but keeping an underweight call on Russia.
Sharma also commented that over the last 20 or so years in emerging markets, equity markets “tend to outperform massively in the next 12-18 months after a new leader comes to power.” He further noted that Asia’s two best performers this year have been India and Indonesia, largely on expectations for political change.
To read the whole article, Are emerging market underdogs the best bet?, go to the website of CNBC.
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