Emerging Market Bears Too Pessimistic: CEO

Thursday, 31 May 2012 | 5:07 AM ET

Brazil continues to see high levels of investment by some of the biggest global players despite suggestions that money is being pulled out of emerging markets as the global macro-economic picture worsens, Slim Feriani, Chief Executive Officer of Advance Emerging Capital Limited told CNBC’s “Squawk Box Europe”.

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“The difference between Brazil ten years ago and now is staggering in terms of (how far) Brazil has come, but not just Brazil, but Latin America in general and the rest of the emerging markets,” Feriani said.

Brazil is one of the BRIC countries which also include Russia, India and China – the acronym was coined in 2001 by Goldman Sachsasset manager Jim O’Neill to describe emerging heavyweight economies.

Portugal remains one of the key investors in Brazil, but with serious question marks about the Portuguese economy, Brazil remains vulnerable to external factors and the global macro-economic picture.

Brazil Cuts Interest Rates by 50 Basis Points
Slim Feriani, chief executive officer, Advance Emerging Capital Limited, told CNBC, "There is more than ever a case for investing in Brazil, and we need to take a step back and look at the big picture and look at Brazil today versus Brazil ten years ago and the difference is staggering in terms of where Brazil has come."

Brazil’s central bank cut interest rates earlier this week by 0.5 percent to 8.5 percent.

Neil Shearling, economist at Capital Economics told CNBC earlier this week that there were a number of weaknesses in the Brazilian economy, suggesting it remained “highly unbalanced”, in particular the housing market which he said was “wildly overvalued with banks becoming increasingly reluctant to lend.” Feriani said that Brazil was vulnerable to the "risk on risk off" mode that had affected the markets for the last five years.

“In a highly globalized, integrated world it is very difficult to decouple and we have to live with that. The entry point is always a difficult point but today at these kinds of levels of valuations for Brazil or the rest of the emerging world, we like quality, value, growth and change and they all tick the boxes,” Feriani added.

He said warnings about the peak having been reached in Brazil and the emerging markets in general were being overplayed.

“The bears get more air time than they deserve. Brazil and Latin countries have been through a number of crises. Europe is now in the learning stage of how to handle a crisis but these (LatAm) countries have a lot to teach particular European policymakers. They have saved for rainy days and can do what they need to do to get out,” he said.


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