Amid Volatility, Play Emerging Markets: CIO
As the United States and Europe increasingly exhibit risks typically associated with emerging markets, consider investing in China, India and Brazil, said Richard Kang, chief investment officer at Emerging Global Advisors told CNBC on Wednesday.
“What’s in the euro land that’s a safe haven?” he asked rhetorically.
“German bonds at close to zero percent sounds like the U.S. at the middle of the abyss.”
Although broad emerging market indices are highly correlated with the S&P 500 and international markets, said Kang, these countries have more successfully avoided the full shock of global market turmoil via high domestic consumption and strong government.
“The emerging market investor and consumer is small in terms of their wallet, but as an aggregate, they’re a very big force,” Kang said.
“Now it’s about China, India, Brazil raising interest rates, controlling their economy. They’re controlled capitalism over there, whereas here, it’s uncontrolled capitalism.”
In fact, emerging regions may be able to avoid mistakes made by developed nations, he added.
“Everything that we’re going through in Europe and the U.S., there’s no good case study to compare ourselves with,” he said. “Whereas the rest of the world is kind of looking at the Europe situation...and say 'maybe we should have a common currency, maybe we should have this commingled economy.' There’s a good case study now for them to learn from.”
Meanwhile, the infrastructure boom in Brazil, China and India remains strong and continues to fuel commodities and employment in those countries, Kang went on to say.
Kang recommends Petrobras, Petrochina, ICICI Bankand Itau Unibanco.
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