Mirae Asset Global Investments

Releases Emerging Markets in 2015: Looking Ahead

January 22, 2015

New York

Mirae Asset Global Investments (“Mirae Asset”) published Emerging Markets in 2015:  Looking Ahead today.  The sixteen page report, authored by the firm’s senior investment team led by CIO José Gerardo Morales, CFA, provides a summary of 2014, an overview of the regions within emerging markets, and insights to the key trends that the team is following in 2015.  investments.miraeasset.us/2015.

Mirae Asset enters 2015 anticipating a modest acceleration in global growth to 3.5% from 3.2% in 2014.  The key driver of this modest acceleration will likely be the developed markets, particularly the United States. While higher global growth has been positive for emerging markets, the narrowing growth differential between developed countries and emerging countries remains a headwind for emerging market sentiment. Commodities and particularly oil are expected to remain under pressure going into 2015 on the back of weak supply/demand balances and an appreciating dollar.  Apart from gross domestic product (GDP), growth differentials and lower commodity prices, other themes that will likely drive emerging markets in 2015 include: global central bank activity as the Fed withdraws, while the European Central Bank (ECB), Bank of Japan (BOJ) and People’s Bank of China (PBOC) look to potentially add liquidity; ongoing geopolitical challenges; progress on structural reforms; and export sensitivities to a stronger U.S. economy.  The positioning toward each of these factors varies from country to country, and 2015 could see the potential for a continuation in the trend of wide, diverging returns within emerging markets.  Please visit http://investments.miraeasset.us/great-consumer/emerging-markets-2015-looking-ahead/ for José Gerardo Morales, CFA, discussing Emerging Markets in 2015:  Looking Ahead

Regional Insights:

  • Asia ex-Japan:

    • Asia looks poised for a more defensive growth profile, given the focus on further developing domestic demand in China and the favorable structural growth stories in Southeast Asia. 

    • The sharp fall in crude oil prices will likely reflect in improved consump­tion in the coming quarters. Coupled with sharply falling inflation, this improved consumption has the potential to provide firepower to the central banks to help boost growth.  

  • Eastern Europe, the Middle East and Africa (EEMEA):

    • With most of EEMEA exposed to com­modity prices, the price levels, especially for oil, will likely be a key factor in the ability of many central banks and governments to try to stimulate growth in the face of a weakening economic backdrop.

    • While 2014 was a year with some key elections in EEMEA, 2015 may help give investors less reason to possibly discount the market as a result of potential political unrest arising from elections.

  • Latin America (LATAM):

    • At 1.8%, LATAM is expected to be the weakest region for GDP growth in 2015, slightly worse than EEMEA, and well short of emerging Asia. Earnings growth in LATAM are anticipated to be around 15%, with Brazil potentially leading the way.

    • As will be the case in other emerging market regions, the decline of commodity prices will have an impact in LATAM, with the biggest beneficiary from declining oil prices being Chile.

Key Takeaways:

  • The effects of elections across emerging markets in 2014, geopolitical challenges, commodity prices and global central bank activity will significantly impact key regions in emerging markets in the coming year.

  • Overall, it remains imperative to retain a selective and active approach to emerging markets as we enter 2015.

Contributors:

  • José Gerardo Morales, CFA: CIO – Mirae Asset Global Investments (USA)

  • Rahul Chadha:  Co-CIO – Mirae Asset Global Investments (HK)

  • Bert Van Der Walt, CFA:  Portfolio Manager & Senior Investment Analyst – Mirae Asset Global Investments (USA)

     

Risk: There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including potential loss of principal.

Emerging Markets Risk — The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political and economic structures in these countries may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Similarly, investors are also subject to foreign securities risks including, but not limited to, the fact that foreign investments may be subject to different and in some circumstances less stringent regulatory and disclosure standards than U.S. investments. 

Equity Risk - equity investments are more volatile and carry more risk than other forms of investment including investments in high grade fixed income securities.

Geographic Concentration Risk  - A small number of companies and industries may represent a large portion of the market in a particular country or region, and these companies and industries can be sensitive to adverse social, political, economic or regulatory developments in that country or region.

Mirae Asset Global Investments (USA) LLC is the investment advisor for the Mirae Asset Discovery Funds.   

 

About Mirae Asset Global Investments
Mirae Asset Global Investments is one of the world’s largest investment managers in emerging market equities*.  With over 600 employees, of which 123 are dedicated investment professionals, Mirae Asset offers a breadth of emerging markets expertise from its offices in Australia, Brazil, Canada, China, Colombia, Hong Kong, India, Korea, Taiwan, the U.K., the U.S., and Vietnam. The firm manages over $75 billion in assets globally, of which more than $16 billion is invested in emerging market equities (as of 6/30/15).  www.miraeasset.us/press

 

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