Ninety One

Beyond the stocks everybody thinks will be the winners, there’s a better (and cheaper) way to get exposure to some of the biggest themes driving markets, according to Ninety One.

China’s reduced dominance in the emerging markets has changed the composition of the index, providing greater choice and diversity for investors as supply chains relocate and Asia becomes the world’s AI factory.

There’s a massive global shortfall in capital to finance the energy transition, and a significant chunk is still being spent in the developed world. But the battle for net zero will be “won or lost” in the emerging market corporate sector.

To get the most benefit from the transition to net zero it’s worth asset owners considering the natural advantages they have and the areas where they’re best placed to provide capital.

There’s been good times and bad times for the EM set, but they’ve exited Covid monetary settings well ahead of their developed market peers and their debt is back en vogue.

The EM story of economic growth and portfolio diversification should work in theory – but what’s worked in practice has been altogether different. Still, gloom around China obscures the many bright spots in a diverse market.

The peak in interest rates and inflation has been supportive of markets, but there’s still plenty of turbulence ahead and investors should be wary of chasing stocks higher.

The use of climate-related investment practices is seeing a sharp fall among the global institutional investor set, while more than half of them are worried about achieving the best returns while delivering emissions reductions targets.

The aggressive sell off in US bonds has prompted many to speculate that interest rates have adjusted upwards on a structural basis. But Ninety One investment strategist Russell Silbertson takes a different view.

China still offers a compelling long-term investment story for investors willing to look past short-term headwinds in property and politics, according to Ninety One.