Aberdeen CEO: I Bought Equities Myself After Sell-Off
The sell-off in emerging market equities has led to a sharp drop in the shares of Aberdeen Asset Management, but the company's CEO said on Wednesday, the turmoil had created lots of buying opportunities for his funds and he had personally been buying stocks.
Aberdeen, which manages £212 billion ($324 billion) in assets and specializes in emerging markets, has seen its stock fall 24 percent since its 2013 peak on May 28. Worries about the company's exposure to emerging market stocks and bonds led Goldman Sachs to downgrade Aberdeen's shares earlier this month.
But CEO Martin Gilbert told CNBC, the sell-off had allowed the firm to pick up stocks that they liked a "third cheaper" than before.
"We are still very positive on emerging markets long term. Actually we have viewed the pull back very positively, I know that sounds very odd but equity markets globally just got ahead of themselves," Gilbert told CNBC on the sidelines of the FundForum conference in Monaco.
"We are able to buy the stocks we like a third less than they were a few weeks ago. We're seeing this as quite a good buying opportunity for emerging markets and Asian equities, in fact I bought some myself last week. I thought it was a great opportunity to get back into the markets."
In recent years, emerging markets have benefited from a surge in liquidity caused by the bond-buying programs of major central banks. But signs the Federal Reserve is planning to ease up on its bond buying later this year has led to a rout for the stocks, bonds and currencies of these countries. Slowing growth and protests in Turkey and Brazil have also heightened investor anxiety about the risks of betting on developing markets.
Gilbert said the government bond market is likely to experience a bear market and that retail investors should steer clear of the space.
"We have had a 35-year long bull market in government bonds, we are probably on top of that market — so we will see a bear market in government bonds," he said. "How long it lasts and how quickly it comes around is the subject no-one really knows the answer to at the moment."
"One of the big questions is why do pension funds hold so many government bonds. Of course, their liabilities will decrease as bond yields go up. But for the retail investor, unless it's high yield or emerging market debt, I would be pretty cautious on bond markets — especially government bond markets over the next few years."