Fund managers believe capital flows into emerging markets will recover before developed markets after the global financial crisis, according to a Standard & Poor’s International Equities – Emerging Markets survey.
The survey found fund managers are ‘buoyed’ by positive economic fundamentals in emerging markets, including strong fiscal policies, high national savings rates, and large foreign exchange reserves of countries like China.
They believe the initial effect of the financial crisis on emerging-market economies will be sharp, through the reduction of exports and via banking channels, according to S&P Fund Services analyst Leanne Fook.
“However, they see compelling value in the sector and are arguing strongly that this sector should recover before developed markets.
“This is because the contagion has been transmitted from the developed economies in a complete reversal from previous crises, which had their roots in the structural problems of the same emerging economies,” she said.
In addition, Fook said the “fact that share markets in emerging economies have fallen as far or further than developed markets is going to be the source of future opportunities”.
Another key finding was that fund managers are committing additional resources to the sector in anticipation of future growth, she said.
