Specialist investment manager of Franklin Templeton, Martin Currie, has provided their 2022 outlook for Emerging Markets and key trends this year across those markets.
The firm said that in 2021 markets had to contend with the ongoing healthcare impacts of Covid-19 as well as its disruptive economic impact, yet despite this, many emerging market countries and sectors delivered a positive performance in 2021.
Alastair Reynolds Portfolio Manager Global Emerging Market, Martin Currie, says: “There are plenty of reasons for optimism as we enter 2022. The relative valuation of emerging markets compared to developed markets is at or approaching 20-year lows on both price-to-book and price-to-earnings measures.
“Earnings growth will continue its upward path following a sharp rebound in 2021.
“Key sectors to benefit from above-market earnings momentum are information technology (10-20% EPS growth) and consumer discretionary (33%) – our largest overweight sectors – as well as financials (9%).
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“China will continue to be a key determinant of emerging market returns, given its prominence in the region.
“Going into 2022, the market has already come to terms with rising interest rates, heightened inflation and resurgent Covid-19 infection rates. The good news for bottom-up investors is that these factors appear to have been priced in already.
“The challenge to us is to identify those companies which are positioned to lead the pack in the year ahead; investing in quality and growth will pay off in the long run and 2022 is no different.
“We believe that there are still plenty of reasons to be optimistic about strong growth this year, such as: rising technology demand, recovering domestic consumption and a worldwide investment wave in green energy solutions,” Reynolds said.
