Emerging mkts may head 20-30% higher in 2010: BlackRock
Published on Thu, Nov 26, 2009 at 09:05 | Source : Reuters
Updated at Thu, Nov 26, 2009 at 11:22
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Emerging mkts may head 20-30% higher in 2010: BlackRock
Investment firm Blackrock is betting on Russia as the best way to position for a global economic recovery, while predicting emerging equities will build on this year's rally with another 20-30% upside in 2010.
Starting March, when central banks and governments around the world turned on the liquidity taps, emerging equities have enjoyed a huge influx of cash, the rally deepening as it became clear many emerging economies are well on the road to recovery.
While currency appreciation generated by such flows is increasingly prompting countries to impose capital controls, Tubbs said the measures will not hurt markets significantly.
He favours domestic consumption stocks, financials and industrials, which are not hurt by stronger currencies.
"Credit penetration levels are low, potential to grow further is immense. In Indonesia for instance, two-thirds of the people don't have a bank account so emerging financials are a great place to be for investors," he added.
This year's 70%-plus gains have boosted valuations but Tubbs says they are by no means expensive.
"We won't be surprised to see 20-30% upside next year," he said. "Valuations are still at a discount to MSCI world stocks even though (GDP) growth and earnings growth in the emerging world will significantly outstrip the developed world."
He said that while some volatility is likely as countries around the world start withdrawing stimulus and raising interest rates, investors will likely use pullbacks to add positions.
