Rethink your Emerging Market Equity exposure

The risk of more protectionism in the US is increasing investors’ concerns about emerging market (EM) assets. However, global trade retrenchment is a trend that has been in place since the Global Financial Crisis (GFC). EM countries have therefore favoured their own domestic economic dynamics. This will likely continue or even accelerate. However, at the micro level, investment selection is now even more important than before as many individual companies could be heavily exposed to exports and thus potentially disrupted by targeted protectionism. Our high conviction approach has always led us to avoid export-based companies and to seek exposure to key domestic trends shaping EM economies and to high-quality business models. In our view, being an active  investor in EM is now more essential than ever.