Will Ballard, head of emerging markets and Asia Pacific equities at Aviva Investors, says YesThe recent turmoil in emerging markets is nothing new. Indeed, we have been here before. The journey has often been painful but it has also been rewarding. This is because although emerging markets are volatile, they are driven by long-term trends which are not derailed overnight.
David Buik, market commentator at Panmure Gordon, says NoIt took a 40 per cent drop in the Shanghai Composite last month for the penny to drop with investors that growth in China was dissipating by the month. Ultimately, nobody knows how economical China is being with the truth about the robustness of its economy. Even though it is accepted that the Chinese authorities can manipulate markets better than most, it would be folly to be duped – by one set of positive manufacturing data – into thinking that all is well.
The fall-out experienced from the drop in natural resources and oil prices, as well as the profits warning posted by Caterpillar, suggests growth, though officially around 6.5-7 per cent, may only be minimal in reality. Growth prospects around the world remain brittle. With the Federal Reserve hell-bent on raising interest rates before too long, a strong dollar seems inevitable. And with Abenomics clearly not working, there is little encouragement out there to titivate investors’ taste buds for emerging market equities.