Over half of intermediaries (55%) currently believe their clients should increase their exposure to emerging market equities, according to the latest Baring Asset Management ("Barings") Investment Barometer.
This is a significant rise from 41% in the last Barometer2, and the highest sentiment towards the emerging markets asset class for the past year. Barings’ research, which canvasses UK financial advisers on a quarterly basis, also found that more than a quarter (26%) of IFAs are ‘very favourable’ towards emerging equities – up from 14% in the last quarter.
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For the second time, the survey also looked to gauge investment sentiment towards Frontier Markets such as Nigeria, Kuwait, Vietnam and Romania. The latest survey found the number of intermediaries ‘very favourable’ towards the asset class up 7 percentage points to 17%, with overall favourability at 55%.
Rod Aldridge, Head of UK Wholesale Distribution at Barings, comments: "We are encouraged by the strong sentiment towards frontier economies. This is a nascent asset class that Barings is very excited about as we believe these markets offer significant potential for long-term growth in a lowgrowth global economy.
Return on equity and dividend yield forecasts for frontier markets in 2015 are significantly ahead of developed and emerging markets, reflective of higher relative economic growth rates and early stage opportunities."
The latest Investment Barometer showed increasing concern from the intermediary sector regarding the impact of China on the global economy, with 58% believing slowing growth in China to be a major macro-economic challenge to investment growth over the next six months.
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By GlobalDataThis is up significantly from a third (35%). Additionally, 56% are also concerned about the impact of the Russia/ Ukraine conflict, the first time this has been raised by intermediaries and far ahead of other concerns such as Eurozone growth problems (27%) and overleveraged economies’ ability to reduce debt (49%).
Rod Aldridge continues: "Our research shows that interest in emerging markets as an investment opportunity is recovering.
The short-term outlook for emerging markets remains challenging, as evidenced by the recent events in Thailand. However, on a long-term basis, we strongly believe that Asian and emerging markets will continue to grow and develop."
