Portfolio Manager Alice Popescu provides a two-minute summary of her Q3 2023 emerging markets investment commentary, including her contrarian perspectives on China.
7 min read | The Altrinsic Emerging Markets Opportunities portfolio declined 2.4% (-2.6% net) compared to the 2.9% decline of the MSCI Emerging Markets Index, as measured in US dollars. Performance throughout the period varied markedly within emerging market, with a stark divergence between EMEA and Latin America. Performance across the market capitalization spectrum also varied, with small and mid-cap EM stocks substantially outperforming the broad EM index. Overall, EM equities outperformed developed markets in the third quarter.
7 min read | by Robert Silgardo | Earlier this year, I spent a week in Taiwan and met with over 20 companies within the Asian technology supply chain [click here to read more]. Economic activity, day-to-day life, and sentiment among citizens and corporate executives are largely back to normal. Most COVID restrictions and policies have been lifted, but many locals (especially those in the service industry) still wear masks, and everyone is required to mask up on public transit (including the high-speed rail). Concerns about a potential Chinese invasion, slower-than-expected demand recovery, and ongoing talent shortages were topics of discussion during many meetings with company executives.
11 min view | This video features a conversation between Sara Sikes (Head of Client Experience) and Alice Popescu (Portfolio Manager on our Emerging Markets Opportunities strategy, which is approaching its three-year track record). The discussion succinctly covers Alice’s philosophy regarding EM investing, her personal and professional journey, opportunities and risks we see in the EM landscape, and insights from recent research trips abroad. Click 'Read more' below to access the video.
9 min read | The Altrinsic Emerging Markets Opportunities portfolio gained 3.6% (3.3% net) this quarter, outperforming the MSCI Emerging Markets Index's 0.9% return, as measured in US dollars. Performance throughout the period varied markedly across emerging markets, with a particularly stark divergence between Asia and Latin America. China’s post-pandemic recovery has been challenging despite the initial reopening excitement, with underwhelming economic indicators driving significant underperformance. Meanwhile, economic activity in Latin America proved far better than expected, with many upward revisions and strong performing currencies in key markets, including Brazil and Mexico.
Alice Popescu, Portfolio Manager, participated in the Pension & Investments webinar entitled “Emerging Markets: A Resilient Outlook.” Topics covered include why EM allocations belong in institutional portfolios, the regions/countries representing the best investment opportunities in EM today, perspectives on China, the benefits of active management, and key considerations for investors considering EM. Click 'Read more' below to access the recording of the webinar. A copy of the P&I EM supplement is also available for download.
5 min read | by Alice Popescu | Earlier this year, I spent two weeks on the ground in India meeting with over 40 corporate and political contacts. The major themes that emerged from the discussions were related to Semi Urban Rural (SURU) developments, the rise of domestic manufacturing clusters, and an underappreciated energy transition. The trip reinforced our belief that India offers an abundance of attractive, long-term investment opportunities among undervalued and often overlooked companies – perhaps surprising to some given its position as the world’s largest democracy (and most populated country).
8 min read | by Rich McCormick and Elijah Crago | Investor pessimism on the ground in Brazil has reached an extreme relative to the past decade – but where negative sentiment exists, there may also be value. The return to power of a leftist president, anti-business rhetoric, and interest rates back at decade highs have turned many investors away altogether – resulting in some of the lowest valuations in the world. Upon returning from a recent two-week trip to Brazil, we are excited by the investment opportunities emerging in the country.
9 min read | The Altrinsic Emerging Markets Opportunities portfolio gained 5.6% (5.4% net) this quarter, outperforming the MSCI Emerging Markets Index's 4.0% return, as measured in US dollars. Performance throughout the period varied markedly within emerging markets. The year began with strength in North Asian (China, Taiwan, and Korea) large caps on momentum from China’s reopening. The robust start tailed off as corporate scandals and political headlines drove underperformance in the large markets of India and Brazil. Additionally, turmoil in the global banking sector following the collapse of Silicon Valley Bank (SVB) made its mark on EM equities, though in a more subdued manner.
Emerging markets are often defined by macro dynamics, but the fourth quarter was especially active on the political and policy fronts. A few key examples include: 1) China’s 20th Party Congress (and the eventual surprise unwinding of zero-COVID policies), 2) Brazil’s presidential elections (and the social unrest that followed), 3) signs of a peaking US dollar (and its effects on global currency valuations), and 4) easing inflation in the US (which could be followed by a shift in monetary policy with carry-over effects in emerging markets). Despite the unsettled circumstances, emerging market equities performed in line with developed markets.
