HSBC Asset Unit Says Emerging Markets Set for Investor Comebackby
Bank invests $130 billion in emerging-market products, funds
Goldman Sachs sees faster developing-market growth in 2016
HSBC Holdings Plc’s asset-management division sees conditions in place for money to pour back into emerging markets as investors become more confident about the global economic outlook.
Investors still more signs of strengthening economies around the world before returning to markets, which have seen almost $1 trillion erased off their value this year, said Bill Maldonado, global chief investment officer equities at HSBC Global Asset Management. Almost a third of HSBC’s $421 billion of assets under management are invested in emerging-market products and funds, according to latest available data.
“If that happens, we can very easily see the kind of return to emerging markets as it was because all the ingredients are in place,” Maldonado said on a conference call with journalists on Tuesday. “There is more risk being out of the market than being in the market and that is why investor sentiment is turning.”
Investors are growing more confident in emerging markets, with Goldman Sachs Group Inc. predicting developing economies to grow 4.9 percent next year, up from 4.4 percent in 2015. That would be the first acceleration since 2010. As growth picks up and weaker currencies help alleviate imbalances, 2016 could see emerging-market assets “put in a bottom and start to find their feet,” Goldman Sachs analysts wrote last week.
Aberdeen Asset Management Plc Chief Executive Officer Martin Gilbert also said last week that sentiment toward emerging markets is starting to improve after two years of outflows linked to those regions.
The MSCI Emerging Markets Index rose for the first time in six months in October, paring annual losses to about 12 percent.
“People are either underweight or not in the market at all, but we now see valuations being very accommodative,” Maldonado said.
HSBC, which is based in London, generates most of its earnings in Asia.