The French manager Carmignac organized a meeting with Spanish media in which Xavier Hovasse, head of Emerging Markets Emerging Equities, presented his vision on emerging markets. The meeting put on the table the key points why Carmignac sees value in markets like Mexico and Indiain a context where the Chinese economy remains weak, the American economy is decelerating and the European economy is experiencing a slight rebound.
Hovasse explains that, although we are in a top-down environmentwhere growth prospects are slim, is a favorable scenario to invest in quality growth companies, that is, companies focused on quality, that can reinvest in themselves and that are highly profitable in the long term. The fund that the company allocates to the management of this type of assets is Carmignac Emergentswith almost 1,000 million euros worldwide.
“In a top down environment, quality is generally favored. Emerging markets do not have a uniform vision, therefore, sometimes the top down environment is very favorable in Asia and unfavorable for raw material exporting countries, or vice versa,” comments Hovasse. He points out that, in difficult times, such as the one experienced with the war in Ukraine or in electoral periods such as the upcoming ones in the US and India, a great variation in risk can occur.
Mexico and Brazil, an investment attraction
There are several emerging countries that have been highlighted by the expert during the presentation. The area of Latin America It is a huge investment universe, with a market capitalization of more than $2 trillion.
In this sense, Hovasse points out that “Mexico looks very good”, being a direct beneficiary of nearshoring, which seeks to establish the manufacturing industry near the US, thus benefiting from the moment of tension in relations between the US and China. Also mention the case of Brazil, which “is a country where the raw materials sector is booming, agriculture is very strong and oil production is through the roof,” says the manager. In addition, Brazil has two prominent sectors: insurance and electronic commerce, which attract investors.
In Mexico the banking sector is experiencing what Hovasse calls “healthy growth.” “Almost half of the population does not have a bank”, explains the expert. “So this point may be interesting for the investment markets, since the population is beginning to contract their first funds. There are opportunities,” he explains.
India, an emerging market with a future
Mexico and Brazil are two of the great objectives of investors but they are not the only ones, India It is also an attractive country, with a market that is located in a similar position to China 10 years ago.
India is one of the most attractive countries for Carmignac, which is currently seeking to expand its growth abroad, with the 60% of internationalized companies. “Its president, Modi, wants the country to export to be more competitive, investing in industries such as pharmaceuticals and electronics,” Hovasse mentions. Furthermore, he has highlighted the opportunity for growth of the Indian technology sector, that has Bangalore, its own Silicon Valley.
On the other hand, Hovasse states that the chinese market, although it has been in decline for several years, “it is the best country for manufacturing products, since it has qualified, cheap labor and good infrastructure.” For that reason, Although Carmignac has been changing the focus of its portfolios, it has not stopped investing in Chinese companiesthat They currently occupy 27% of your portfolio. Mainly, the manager focused her investment on the e-commerce sector, with companies such as JD.com and Vipshop.
