Three Emerging Markets Set to Surge in 2012

Posted by Brittany Stepniak - Friday, March 30th, 2012

Risk on trade is back! But what does that mean for emerging market economies?

In developed countries growth has slowed severely, especially in response to the crisis in Europe. Therefore, emerging economies are looking pretty appetizing.

Meanwhile, investors are growing more comfortable with taking some risk on account of a slight economic upturn. These two factors combined make such investors likely to look toward emerging markets with good performance predictions when making investment decisions this year.

Citigroup's global emerging market strategist, Geoffrey Dennis, discusses fundamentals for emerging markets and how well they will fare in the remainder of this year.

From the sounds of it, earnings momentum for emerging markets looks to be coming to a close and the fundamentals for emerging market banks are in a good position as well.

In this global economic upturn, emerging markets have performed very well in the first quarter. Experts seem to predict higher growth estimates into the second quarter as well.

According to Dennis, Chinese markets are under-priced and the “fundamentals for the EM financial sector are very strong and is overweight the group as well as materials and discretionary cost.”

Asia – the most promising region for growth, especially China –, India (expected to grow by seven percent this year), and Latin America (up to four percent growth) are all expected to see premium growth. The emerging portion of Europe is likely to experience valuable growth as well.

The Chinese market has underperformed recently, and Dennis says those valuations are extremely attractive to investors.

Dennis reveals the three top sector picks in this video interview and the biggest risks facing emerging markets:

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