GLOBAL - Emerging markets are in much better shape than they were five years ago, and fund managers are now even more keen to hang on to the decoupling theory, according to Standard & Poor's.
S&P fund services lead analyst Alison Cratchley said: "Managers agree that the decoupling idea has clearly been discredited as it applies to stock markets. Even so, they think it may apply, at least in part to emerging economies."
DWS emerging markets and DWS Invest BRIC Plus manager Thomas Gerhardt was cited as saying that investors were not currently focused on fundamentals and said the timing of any stock market recovery would depend on the depth and length of the US recession.
WestLB Mellon Asset Management fund manager Hugh Hunter noted that emerging markets performance was being driven increasingly by domestic activity and should be insulated to some extent from the problems in the developed markets.
He said: "A considerable number of companies with solid business models and strong fundamentals are now trading at very attractive multiples, [however] emerging market equities are unlikely to perform well until there is some stability and clarity over the prospects for the global economy and the financial sector."
Louisa Lo of the S&P AA-rated Schroder ISF Greater China fund took a similar view. She said she was positive on the long-term investment case for the Greater China region, and noted that its economies were increasingly being driven by internal growth factors and so were less reliant on global growth than in the past.
Lo claimed this had let to an emphasis on domestic-focused companies. However, in the short term she was cautious and expected regional equities to remain under "significant pressure".
Meanwhile, Wojciech Stanislawski, manager of the S&P A-rated Comgest growth India fund viewed India as the only real domestic growth story in Asia that was not heavily dependent on exports.
He believed that although it still has to import energy, it has national champions with good business models, which support the country in the long term.
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