Selling emerging markets and buying into developed ones has been the consensus call since the U.S. Federal Reserve broached the idea it would taper its asset purchases, but what if the two spheres aren't really in opposition?
"The general thesis they have – which most people have – is that there's going to be a strong recovery in the developed markets and as a consequence, particularly because of the Fed tapering action, the emerging markets will tank," said Piyush Gupta, chief executive of DBS Group, at a presentation to private banking clients.
"I agree with half of the thesis. I tend to believe that the recovery in the developed markets will happen and continue to happen this year," he said. "But I have to say I am not in the camp that says this is a zero-sum game and if the developed markets do well that necessarily means emerging markets are going to go down."
For much of 2013, markets have behaved as if they believed that was the case, with shares in the U.S., Japan and Europe climbing, while emerging markets convulsed.
But Gupta doesn't expect that will continue.
"When there is a degree of confidence particularly in the U.S. and in the large U.S. investor community, that confidence actually spills over favorably to the rest of the world as opposed to unfavorably," he said.
Additionally, within Asia, "the general view is that as rates go up, dollars and money will leave Asia, credit will start getting tight and as credit starts getting tight, Asia will have a bit of a problem," he noted.