Several Citigroup (NYSE:C) executives stated recently they’re very bullish on emerging markets, and valuations should be attractive based on a variety of factors related to growth.
David Ratliff, MD & Head-Investor Sales (AsiaPac), said, using India as an example, that “the debate in India is whether the economy grows at 7-8% or 5-6% which is a quite healthy debate to have given that most of Europe and North America is barely growing.”
China has a similar trend right now, with expectations they won’t grow at double-digit rates, but should continue growth in the high single-digits.
The problem in emerging markets isn’t so much the companies operating there, but those companies outside the region which were projecting their own growth based on demand which they thought would be higher. That seems to have changed now, so even though when comparing some emerging market growth with Western countries it looks impressive, in fact it has settle some, and growth rates will be slower going forward.
That doesn’t mean emerging markets are a bad investment and opportunity in any way, just that they are settling down to more sustainable rates than they have been growing at in the recent past.
Global Equity Strategy, at Citigroup, Robert Buckland says they’re advising clients on emerging markets to “buy on dips but to be very careful about chasing the rallies.”
One caveat to me is the emerging economic conditions which could completely skew these bullish sentiments from Citigroup. All of it assumes a best case scenario which factors in an already slowing down global economy.
If that changes to a much worse scenario, which it probably will all the positive factors cited by Citigroup will fall by the wayside, although I agree that there will be growth in some emerging markets, especially Asia, no matter how bad things get.
Even with things slowing down, there just isn’t any other place to go in equities when considering growth as the chief factor.