Emerging markets could actually benefit from the trade war, says pension fund

  • The U.S.-China trade war could force emerging markets to implement structural reforms that would benefit long-term investors, according to Suyi Kim from the Canada Pension Plan Investment Board.
  • "We believe in the long-term expected returns of emerging markets," she said at the World Economic Forum in Tianjin.

Tit-for-tat trade tariffs between the United States and China are widely expected to hit developing countries hard as they rely heavily on exports to fuel growth. But there's one bright spot, according to one of the world's biggest pension funds.

International trade pressures could eventually force the governments of emerging economies to implement structural changes and long-term reforms, Suyi Kim, senior managing director and head of Asia Pacific at the Canada Pension Plan Investment Board said at the World Economic Forum in Tianjin on Thursday.

That would be highly beneficial for long-term investors such as the CPPIB, Kim told CNBC's Martin Soong.

"We have the luxury of being able to ride out short term volatility," she said, explaining that the fund operates under an investment horizon that spans decades.

The fund's value stood at $366.6 billion at the end of June, out of which 15 percent is dedicated to emerging markets. By 2025, the sector is expected to make up one third of the company's total assets, according to Kim, who called the move "prudent diversification."

"We believe in the long-term expected returns of emerging markets," she explained, adding that China, India and Brazil were among the key heavyweights.

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