Three Emerging Market Stocks To Watch

There are many investment opportunities in developing markets – such as these three.

- Feroz Basa

What do a discount retailer in Turkey, a wealth manager in China and a pharmaceutical group in Mexico have in common? They are all high-quality companies, that are fairly valued and well governed. And this makes them three of my favourite stocks.

Despite short-term macro-economic headwinds, emerging markets (EM) are on a sustained upcycle as aggressive Covid-19 vaccinations begin globally, and the market shifts its focus to re-opening trade and the medium- to long-term structural growth potential not currently captured by EM valuations.

The case for emerging markets is easy to find in the numbers: 5.8bn of the global population of 7.2bn people live in emerging market countries, and by 2023, 80% of the world’s middle-class consumers will live outside Europe and the US. The growth potential in these markets is massive, which makes a strong case for holding stocks in high-quality companies across these regions.

Just be careful to abandon core investment fundamentals in unfamiliar territories. When heading into new markets, investors need to have a clear philosophy, and they need to conduct rigorous due diligence. Here are three quite different stocks in three different countries that I am bullish about.

BIM