UK-based J.P. Morgan equity strategy analysts Mislav Matejka, Emmanuel Cau and Prabhav Bhadani are advising that investors should continue to rotate from domestic emerging market companies and into EM exporters:
Longer term, we advise a continued rotation out of [European] domestic plays into exporters, and out of the developed markets into emerging markets exposure. This should not just be confined to miners and tech, which we upgraded in May to overweight, but also to autos and capital goods. The area we would be adding to foremost in this weakness is DAX – the cheapest market in Europe at 11.9x P/E, beneficiary of a falling Euro and of a pickup in Chinese and U.S. activity.
Barron’s has also compiled from JPM the following shortened list of exporters with the rankings based on exposure to emerging markets:
- Fresnillo (FRES and FNLPF) Materials 100%
- Randgold Resources (RRS and GOLD) Materials 100%
- Anglo American (AAL and AAUKY) Materials 91%
- Standard Chartered (STAN and SCBFF) Financials 88%
- Tullow Oil (TLW and TUWOY) Energy 85%
- SabMiller (SAB and SBMRY) Staples 81%
- Millicom International (MIC and MIICF) Telecom 77%
- ASML Holding (ASML) IT 76%
- Old Mutual (OML and ODMUF) Financials 68%
- Jeronimo Martins (JMT and JRONY) Staples 65%
To read the whole article, JPM: Favor Emerging Market Exporters, go to the website of Barron’s.
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