Emerging markets demand long view

Australian investors who are prepared to maintain a long-term perspective are likely to be rewarded by maintaining their interest in emerging markets, according to a new report released by T. Rowe Price Australia.

T. Rowe Price portfolio manager for Asian emerging markets Frances Dydasco said that as long as Australian investors maintained a long-term perspective, the economic growth story in emerging markets remained firm.

“The fact that emerging market equities are down largely due to US financial events, and not internal issues, means there are some tremendous bargains available,” she said.

The T. Rowe Price report suggested that insulation from a US economic downturn varied widely by country with nations such as Mexico, Singapore and Taiwan being more affected than, say, China, Brazil, India and Russia.

“Although it is impossible to completely shelter emerging markets from the impact of a US downturn, they are in a much better position than in previous years,” Dydasco said.

“There is an underlying logic for exposure to emerging markets,” she said. “The real story is that of investing in developing economies, which by definition grow faster than the developed world, and in many cases improved policy management.

“As long as you have a long-term view, it has little to do with immediate market events,” Dydasco said.