4 favorite ‘new emerging markets’
Frontera recently spoke to Mattias Martinsson, Chief Investment Officer of Tundra Fonder. Tundra Fonder specializes in frontier markets, which it likes to term as the “new emerging markets.” The firm currently has approximately $260 million worth of assets under management. In line with its investment approach of focusing on only a few markets at a time, Tundra is currently actively looking at a variety of Asian emerging markets to include Pakistan (PAK), Vietnam (VNM), and Bangladesh. The firm’s current investment focus is also drawn towards Nigeria (NGE), Kenya, and Egypt (EGPT).
Within the frontier markets (FRN) (FM) universe, the asset manager’s portfolio is heavily tilted towards Asian emerging markets. “Tundra likes to invest in the next generation of companies from the next generation of emerging markets. Right now its favorite markets are Pakistan, Vietnam, Egypt, and Bangladesh. Our largest overweight is in Pakistan,” Martinsson told Frontera.
Why is now the time for Asian emerging markets to grab the spotlight?
For 2017, Tundra Fonder sees the developing economies (EEM) (VWO) as the prime contributors to growth and market returns. “We’ve touched the interest rate bottom in developed markets,” said Martinsson, who believes that it is now the time for the new emerging markets to grab the spotlight. The developed markets (EFA) (VEA) have limited recourse left since they’ve maxed out on their most important tool to spur growth — the lowering of interest rates. They cannot buy bonds, as interest rates are only expected to go up. They’ve hit their respective interest rate bottoms, and will now be seen moving in the direction of monetary policy tightening. So, growth may be hard to come by for these markets. The important implication here is that “we need to see what kind of growth that translates to, for the developing markets,” said Martinsson.
The subsequent installments in this series give additional perspective into Tundra Fonder’s investment views on markets including Pakistan, Egypt, Vietnam, and China.