Surveys
IFA Favourability Towards Emerging Markets Increases Despite Geopolitical Tensions

Over half of intermediaries (51 per cent) currently believe their clients should increase their exposure to emerging market equities, despite slowing growth in China and concern regarding the impact of conflict in the Ukraine, according to the latest Baring Asset Management barometer.
Over half of intermediaries (51 per cent) currently believe their
clients should increase their exposure to emerging market
equities, despite slowing growth in China and concern regarding
the impact of conflict in the Ukraine, according to the latest
Baring
Asset Management barometer.
The research revealed that more than a quarter (26 per cent) of
IFAs are “very favourable” towards emerging equities, up from 14
per cent in the last quarter, while the number of intermediaries
“very favourable” towards frontier markets was up 7 percentage
points to 17 per cent, with overall favourability at 55 per
cent.
“We are encouraged by the strong sentiment towards frontier
economies. This is a nascent asset class that Barings is very
excited about as we believe these markets offer significant
potential for long-term growth in a low-growth global economy.
Return on equity and dividend yield forecasts for frontier
markets in 2015 are significantly ahead of developed and emerging
markets, reflective of higher relative economic growth rates and
early stage opportunities,” said Rod Aldridge, head of UK
wholesale distribution at Barings.
The survey found that 58 per cent of those questioned believed
slowing growth in China to be a major macro-economic challenge to
investment growth over the next six months up from 35 per
cent. Additionally, 56 per cent are also concerned about
the impact of the Russia/Ukraine conflict, far ahead of other
concerns such as eurozone growth problems (27 per cent) and
over-leveraged economies’ ability to reduce debt (49 per
cent).
“Our research shows that interest in emerging markets as an
investment opportunity is recovering. The short-term
outlook for emerging markets remains challenging, as evidenced by
the recent events in Thailand. However, on a long-term
basis, we strongly believe that Asian and emerging markets will
continue to grow and develop,” said Aldridge.