Emerging market investors mistaken to restrict themselves to China

Australian investors need to think of investing in emerging markets as a whole, instead of restricting themselves to investing in China and India, according to managing director of Rexiter Murray Davey.

Australia’s resources and China’s increasing influence will make Australia much more linked into the Chinese and Asian economies than most other mature institutional markets, influencing Australian investors to look to Asia and particularly China, instead of looking at the whole emerging market sector, Davey said.

But it was wrong to think of the emerging markets as just a “proxy” for China and India, he said.

Places like Russia, Turkey, Philippines, Indonesia and Brazil were growing quite well, and their share markets were growing quite large at the same time, according to Davey. He believes there is plenty of emerging market opportunities for investors apart from China.

The market crisis had clearly demonstrated the vulnerability of individual stock markets around the world, and it would be unrealistic to think of individual emerging markets to go in a different direction from the general market, he added.

China and India are the big locomotives of the emerging economies, but are not necessarily the place investors could make the most money in the short to medium term, he said.

Smaller economies such as Russia, Turkey, Thailand, Mexico, and Indonesia offered the best value in the short term as they offered cheap stocks and plenty of opportunities. These smaller economies don’t fall into the category of more mature emerging markets, such as Korea, which were driven by events in the developed world, he said.