Taking into account the continued decline in commodity prices and many country-specific factors, the development of individual equity markets in emerging countries is expected to be very mixed again in 2016.
Among our favorites are the countries of the region ofCentral Eastern Europe (EEC). They profit from the collapse in commodity prices and the continued economic recovery in the euro area. Added to this are the generally positive side effects of the ECB's ultra-expansionary monetary policy for its financial markets and the relatively high domestic policy stability.
The latter at the moment should be seen with some reservations precisely as regards the Poland. The new combination of right-wing nationalist and conservative president and government is causing significant problems for investors and in intra-European relations.
In addition to the Central European region, some countries could also show a good risk-return profile emerging Asians. These are often significantly dependent on the Chinese economy, which presents both relative risks and opportunities. The latter could materialize especially if widely held fears about the Chinese economy prove too pessimistic.
India also continues to look promising, but it will be very decisive to what extent the government's ambitious plans are implemented. For now we still have to evaluate Brazil with skepticism; the country will most likely face difficult economic and domestic political times.
Of course, this does not exclude that individual companies could offer good opportunities even before an apparent turnaround in the economy. Although economic considerations are important and useful, individual valuation at company level will continue to be important in our Emerging Markets funds in the future.
