Interview with fund manager Gabriela Tinti
What sort of performance did ERSTE STOCK EM GLOBAL achieve in the first half of 2022?
The emerging markets recorded a clearly negative performance in the first half of 2022. The ERSTE STOCK EM GLOBAL fund lost 9.19% of its value (in EUR) in the first six months of the year.
The various regions in the emerging markets delivered a mixed set of performances. Latin America came out on top at +8.3%. Asia, the biggest region, suffered under the aforementioned problems for most of the time, but in June the Chinese equity market started to recover. The Chinese macro-economic activity exceeded expectations, substantiating the hope that the second quarter would have been the bottom as far as 2022 GDP growth was concerned. The talks between China’s government authorities and technology managers seem to have fuelled expectations that the crackdown on technology companies could come to an end. Whereas the stock exchanges in South Korea and Taiwan have been negatively affected by the weak economic outlook, the Indian economy has proven robust, despite the fact that the growth forecast (GDP 2022/23e: +7.6%) has been revised downwards due to rising energy prices and increasing inflation.
The Middle East and Africa (EMEA) were also a mixed bag in the first half of the year. Russian companies were suspended from trading (for foreign investors) as a result of the sanctions against Russia, while the focus continued to shift to countries like Turkey and Saudi Arabia. Both stock exchanges (Turkey +10.6%, Saudi Arabia +9.2% in EUR) clearly outperformed the MSCI Emerging Markets and MSCI World indices.
How is ERSTE STOCK EM GLOBAL currently positioned? What is your focus in this fund?
Asia remains the growth engine of the global economy, dominating the ERSTE STOCK EM GLOBAL fund as the largest region. Given its strongly growing middle class, Asia will continue to rely on domestic private consumption and push innovations in technology. Therefore, we can see interesting investment opportunities in technology (IoT, cloud etc.), new infrastructure (expansion 5G, environment), healthcare, and consumer goods. Among our preferred themes are the accelerated take-up of clean energy in China which is laid down in the five-year plan that started in 2021. China’s agreement to achieve net zero CO2 emissions by 2060 requires comprehensive and swift investments in clean energy technologies and facilities for years to come. In addition, new infrastructure programmes for example for 5G network expansion, AI, clouds, the expansion of healthcare and others have been announced.