Amundi Asset Management, Europe’s biggest fund manager, says that the rising dollar trend that caused so much damage on risk appetite last year has subsidized, which is good news for emerging markets, but Nigeria would miss out on funds over election risk.
“The two macro threats – basically the dollar and higher interest rates coming from the United States are basically diminished”, Pascal Blanque, Chief Investment Officer of Amundi said in an interview in Singapore, noting that there is a possibility for most currencies in emerging markets to appreciate, thus favouring emerging markets.
According to Blanque, the group has joined other top investment banks like Morgan Stanley and Goldman Sachs Group that expect moderation in trade tensions and less tightening policy stance of Federal Reserve, which would lead to a rebound in developing economies after a tough 2018.
However, the threat has shifted to global growth from stronger dollar and rising Fed rate, thus making India, Russia and Chile leading destinations for investment among emerging markets as they are poised to perform better than peers with weaker fundamentals, according to Blanque.
Amundi has a preference for stocks and bonds in China, Indonesia, Czech Republic, Brazil, and Peru because they offer high-yielding currencies with sustainable levels of debt and earnings growth.
Europe’s top fund manager, which controls $45 billion assets in emerging markets, favours countries where central banks have scope to cut policy rates to offset signs of a slowdown.
Amundi Boss expects earnings growth in emerging markets to average between 5 and 7 percent in 2019.
“When it comes to market to avoid, Amundi is looking at the balance of payment as a key metric, shunning Turkey. It is also guarded on South-Africa and Argentina because of their deficits and they also face risk from their forthcoming elections”, Blanque said, adding that,
The group is cautious on Mexico over border wall issue which could yield negative results including worsening of international relations with the United States.
Amundi says it has not worried over India’s election coming up between April and May 2019 as fiscal reforms are on the ground.
Commenting on Amundi’s decision to avoid Nigeria, Olayinka Olohunlana, a Lagos-based economic and financial analyst, said that it is unsurprising as the country’s investment climate is marred by heightened politically motivated tensions which have scared many foreign investors.
“It is safe to say that Nigeria’s unconducive investment climate that is being tainted by political instability, ethnic crisis, slow growth and low level of diversification among others might have reduced Amundi’s confidence in Nigeria”, she said.
ISRAEL ODUBOLA
