GO
Loading...

Expect 6% Annual Growth in Emerging Markets: Barclays Exec

Monday, 14 Feb 2011 | 1:26 PM ET

Inflation worries over emerging markets are cyclical and short-term, Michael Gavin, managing director and head of emerging markets strategy at Barclays Capital, told CNBC on Monday.

"The inflation concerns are exactly because these are high-growth economies that are reaching the limits of their productive capacity and need to tighten monetary policy that concerns investors. That's a cyclical, short-term tactical influence," Gavin said.

"We expect emerging economic growth to generate earnings growth on the order of 6 percent a year. We expect roughly 2 percent currency appreciation over the same time period," he said, adding, "on top of that you'll get 2.5 percent dividend growth, so you're very close if not above double-digit levels, kind of easy from a longer term."

Emerging Market Plays
Michael Gavin, head of emerging markets strategy at Barclays Capital, tells CNBC he likes China and India equities going forward.

Right now, Asia has the largest growth potential among all the emerging markets, Gavin said.

"It's Asia at this point, Brazil of course is included but when one looks at the Brazilian equity market it just does not loom as large as it did in the debt market ten years ago. Really, in the end, this should be Asia's decade more than Latin America's," he said.

The expectation is that the volatility in emerging equities should be similar to the developed countries, Gavin added.


Watch CNBC's "The Strategy Session" weekdays at Noon ET

Follow Strategy Session on Twitter: @CNBCStrategy

  Price   Change %Change
BARC
---