Investment trust insider on EMEA – James Carthew: In emerging market turmoil, ‘eclectic’ EMEA has surprise appeal
China still dominates the MSCI Emerging Markets Index, accounting for 30% of the benchmark at the end of November 2022. Its weak markets, largely a product of its zero-Covid policy, have weighed on the returns of global emerging markets trusts this year.
Most have adopted an underweight exposure to China and so have missed out on the recent rally spurred by hopes of a relaxation of the policy. I am not convinced that this rally is sustainable though – as the death toll mounts and pressure on the health system grows, the clamour for lockdowns to return may become overwhelming.
Emerging markets investors turned to India and to some extent South America this year. Russia might have been a beneficiary too had it not made itself a pariah. There has also been increased interest in EMEA – emerging Europe, Middle East and Africa.
Over the past week, we have seen results from Barings Emerging EMEA Opportunities (BEMO) and BlackRock Frontiers (BRFI). In addition, a couple of weeks ago what was JPMorgan Russian secured permission from shareholders to adopt its new EMEA mandate, changing its name to JPMorgan Emerging Europe, Middle East & Africa Securities (JEMA).
JEMA’s shares have rallied since shareholders approved its new remit. However, their approval came at a price – the board had to promise not to issue stock. That means that its new EMEA strategy is always destined… read more here