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CNBC EXPLAINS

Bullish on Emerging Markets, for Now: Analyst

Published: Tuesday, 21 Feb 2012 | 5:18 PM ET

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By: Katie Little
News Associate

With the iShares emerging markets [EEM Loading... () ] exchange-traded fund up 15 percent, one analyst said his outlook remains bullish for the space — at least for now.

“I’m certainly bullish for the first half of the year” on emerging markets, said David Riedel, president of Riedel Research Group. “I think you’ve got expansionary policies in Brazil, Russia, and China, and I think that really sets the stage for emerging market outperformance in the first half of the year.”

But the second half of the year could pose problems due to inflation , Riedel told CNBC. An increase in food or fuel prices could adversely affect the emerging markets.

“I would definitely be long some of the high-beta names like Gafisa [GFA Loading... () ], which trades in New York," he said. "I’d be long the banks — Itau [ITUB Loading... () ], and I’d be long Ambev [ABV Loading... () ] for my exposure to Latin America. Then in China, look at China Mobile [CHL Loading... () ] — still very inexpensive, great dividend yield and going higher.”

With $50 billion in cash sitting on its balance sheet, China Mobile benefits from its size and “extremely well-built-out network,” he said.

He added the company could get the iPhone sometime this year. Although the iPhone contributed to Sprint Nextel’s [S Loading... () ] earnings loss this quarter, Riedel said China Mobile could absorb any resulting hit in earnings in order to accommodate the iPhone in the long term.

Additional News: China Telecom in Deal to Sell iPhone in the Mainland

Additional Views: Apple’s Chinese iPhone Opportunity

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Disclosures:

The companies mentioned in this article are not owned by David Riedel or Riedel Research Group.

Disclaimer

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Follow Katie Little on Twitter @katie_little.