India and Mexico are the “best structural stories” in emerging markets for investors seeking assets that will benefit from a weaker dollar environment.
The two countries are undertaking political, fiscal and tax reforms, which create a better competitive environment for businesses to operate in, said Malcolm Dorson, senior portfolio manager at Global X Management in New York.
India is also in “prime spot” to benefit from the shift in supply chains away from China, he said on Bloomberg TV. “They’ve got the largest working age population in the world, some of the best education rates in the world and they’re ready to take advantage of any uncertainty in China or other parts of the world where people want to move away their supply chains,” he said.
Some key takeaways from Dorson:
There’s been a “flight to quality” as asset allocators and investors seek to diversify away from the US and find beneficiaries of a weaker dollar environment when it comes through
EM asset valuations are currently one standard deviation below historical averages, while US valuations appear stretched
EM correlation to Chinese growth has started to decouple with more focus on domestic consumer growth and supply chains shifting away from China. Mexico, India and Southeast Asia are “benefiting from China’s demise”
Outcome of Greek election at the weekend will be “very positive” for local stocks from the prospect of continuity of economic policy
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