Emerging markets set for value vindication: Manager

The concentrated growth story may be coming to an end says Brandes’s Gerardo Zamorano

Michael Ryval 5 December, 2019 | 1:53AM

Hong Kong street market

For the past five years, the value approach to stock-picking in emerging markets has lagged the growth approach. That has made it challenging for value-oriented stock pickers such as Gerardo Zamorano, who helps to oversee the 3-star rated $291.2 million Brandes Emerging Markets Value Class F. Yet Zamorano is confident that his team at San Diego-based Brandes Investment Partners will be vindicated as the value style comes back into favour.

“When you look at the benchmark MSCI Emerging Markets Growth Index its return over the last five years has been extremely concentrated,” says Zamorano, Director, Investments Group, a 24-year industry veteran who joined Brandes in 1999. “Essentially two companies, Alibaba (BABA) and the combination of Tencent (00700) and Naspers (NNWN) [whose main value is shares in Tencent], have accounted for two-thirds of the index’s return over the last five years. More than 100% of the index’s return came from the five largest companies in the EM index. This is a story of concentrated performance by a handful of companies that have grown so much and are such a big part of the benchmark that they overwhelm the other companies [in the benchmark].

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alibaba Group Holding Ltd ADR261.01 USD-0.22
Boeing Co178.44 USD2.98
Naspers Ltd ADR34.40 EUR0.00
Tencent Holdings Ltd546.50 HKD-2.93
Wynn Macau Ltd13.28 HKD0.15
Wynn Resorts Ltd74.13 USD0.00

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Michael Ryval  

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