Salient to Investors:

Allan Conway at Schroder Investment Mgmt said:

  • Emerging-market equities will return as much as 20 percent in 2013 as consumers drive growth, leaving them less reliant on the US and Europe.
  • India and China will drive economic growth among developing nations in 2013
  • The increasing relative resilience of emerging markets over the last decade will continue because of the massive consumer demand story in countries like India and China.
  • The emerging markets’ economic fundamentals related to fiscal and trade are very positive, so returns will rise as Europe continues to muddle through its debt woes and the U.S. resolves its disagreements over the federal budget.

The MSCI Emerging Markets Index has returned 17 percent in 2012 and 334 percent over the past 10 years, versus 15 percent and 90 percent respectively for the S&P 500 and 19 percent and 86 percent respectively for the Stoxx Europe 600. The MSCI emerging-markets index is at 12 times estimated earnings, versus 14 for the developed-market index.

The IMF predicts emerging-market economies will grow 5.6 percent in 2013, versus 3.6 percent for the world economy

Michael Hartnett at Bank of America said emerging-market equity funds posted the most weekly inflows in 10 months, and the past four weeks of inflows exceeded levels that trigger a sell signal – markets most vulnerable to sell-offs are those most overbought, such as Turkey, Mexico, China and India.

Jan Dehn at Ashmore Investment Mgmt said improvement in global manufacturing should stoke gains in emerging markets, whose broader outlook remains extremely healthy.

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