Saudi Arabia, Qatar & South Korea emerging markets fund
Dan Tubbs, the co-manager of Blackrock Emerging Markets fund, has suggested that concentrating on just BRIC economies may be a thing of the past. Tubbs is underweight in China and has moved much of the cash into South Korean stocks
He says there is a danger of fixating on the stocks when there are 18 other global emerging markets that could do well. He is fairly bullish on South Korea, Saudi Arabia, and Qatar.
He expects these lesser-known global emerging markets (GEMs) to do far better in growth than their are peerss over the next 12 months.
In an interview with Citywire magazine he said they were looking for relatively undiscovered markets and Saudi Arabia and Qatar fit the category, while South Korea is a good example of a GEM already tuned into the global economy.
South Korea has benefited from strong money management and fiscal policies through the global downturn and was reaping the benefits of a pickup in global exports. As the global economy recovers, South Korea will be able to benefit because exports contribute 45% to its GDP.
Saudi Arabia is currently “unclassified” as access has been limited but as the market opened up in 2008 it has become easier to tap into Saudi’s demographic and he expects the country to possibly replace real when Israel moves up to the developed index. Tubbs reckons that it’s the consumer facing stocks which hold the key to growth in Saudi Arabia.
His reasons for adding exposure to Qatar is because he thinks it will benefit from attempts to diversify its economy. Qatar is the size of Belgium that has massive liquid natural gas and oil reserves and has the second-highest GDP level in the world. Qatar is trying to move away from over-reliance on its commodity resources by creating three centres of excellence; education, science and technology, and finance.
Globally known universities are setting up small offices at Qatar and they have built a science park to attract global tech firms which should lead sustainable growth.
Over three years to the end of April, the Black Rock Emerging Markets fund has returned 15.42% compared to the MSCI emerging markets benchmarked return of 14.97%, so it could be one to watch.
But what is even more interesting is watching how its constituents develop, and whether there is scope for the private investor to invest into the lesser known regions via these emerging markets ETFs, provided they can stand the risk!
