The changing tide of emerging-markets investing

Tech stocks gain prominence, says Capital Group's Shaw Wagener.

Sonita Horvitch 21 February, 2018 | 6:00PM

Shaw Wagener, senior portfolio manager at Los Angeles-based Capital Group, says that an important trend in developing countries is the rise in prominence of major technology and e-commerce companies and the shift away from the traditional natural-resource dominance in their equity markets. "There has been a shift toward information technology in countries like China, Russia and Brazil."

In China, for instance, the more recent growth of companies like  Alibaba Group Holding Ltd. (BABA) and  Tencent Holdings Ltd. (TCEHY) has resulted in the information-technology sector now representing close to 30% of the country's benchmark stock index, Wagener says. These higher-growth companies have changed the valuation profile of that index. He says it had a recent price/earnings ratio of 16 times versus a low point of 13 times in 2013.

With a 30-year specialization in emerging markets at Capital Group, Wagener, who is based in Los Angeles, has a background in both fixed-income and equity investment in developing countries. He began his involvement in emerging markets as a trader in 1986. In that year, the asset manager launched one of the world's first emerging-markets equity funds.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alibaba Group Holding Ltd ADR205.16 USD-3.49
ICICI Bank Ltd ADR14.56 USD-3.26
Tencent Holdings Ltd ADR49.05 USD-4.70

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Sonita Horvitch

Sonita Horvitch