Emerging Stocks to Beat Developed Peers on Growth, Acadian Says

Jan 29, 2014 7:03 pm ET

Jan. 29 (Bloomberg) -- Emerging-market stocks will beat their developed peers this year after the biggest underperformance in 15 years, said John Chisholm, chief investment officer at Acadian Asset Management.

“It’s not that emerging markets will necessarily have a great year, but they are likely to do a little better than developed markets in 2014,” Chisholm, who helps manage $65 billion at Acadian, said in an interview today at Bloomberg’s headquarters in New York. “We still look at 5 percent plus GDP growth in aggregate for emerging markets.”

The International Monetary Fund kept its expansion forecast for developing countries this year at 5.1 percent on Jan. 21, higher than the 2.2 percent growth predicted for advanced economies. Mark Mobius, chairman of Templeton Emerging Markets Group, said inflows into developing nations will resume later in 2014 following a selloff triggered by the Federal Reserve tapering monetary stimulus.

The Fed will trim its monthly bond buying by $10 billion to $65 billion, sticking to its plan for a gradual withdrawal from departing Chairman Ben S. Bernanke’s unprecedented easing policy. Policy makers pressed on with a reduction in the purchases intended to speed a recovery from the worst recession since the Great Depression, even after payroll growth slowed in December and amid a rout in emerging-market currencies.

South Korea and Taiwan are Acadian’s favorite emerging markets, because of “cheap” electronic companies such as Samsung Electronics Co., while consumer stocks in developing nations have become too expensive, according to Chisholm.

The Acadian Emerging Markets Portfolio has returned 16 percent over the last five years, beating 77 percent of peers, according to data compiled by Bloomberg.

--Editors: Rita Nazareth, Marie-France Han