Emerging market equities have been enjoying a bull run since early 2016, but medium to long-term drivers remain in place – and the universe continues to offer even more value for those prepared to be selective.
Global Emerging Markets: Rich diversity
Emerging markets are often lumped together under the acronym ‘GEM’, or global emerging markets. In reality, this is not a homogenous mass of similar companies trading at similar valuations. Although certain sections of the market have grown expensive, this is a richly di¬verse universe where it pays to be discriminating. Value can almost always be found, and stock selection can help drive superior long-term returns.
This is not a question of chasing short-term share price reversions or gauging whether the next earnings release will be a hit or a miss. It requires an investment process that doggedly assesses long-term corporate value – and whether the current share price offers a worthwhile discount. A company’s strengths and vulnerabilities extend beyond traditional financial state¬ments. They include corporate governance, social considerations, and the company’s ap¬proach to the environment, because such ESG issues can seriously impact earnings power, assets and liabilities over the long term.
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