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13 Mar, 2008


By Sara Smith | 00:01:00 | 13 March 2008

Martin Currie's Daruisz Sliwinski says 2008 could be a far trickier year of emerging markets.

Sliwinski said: 'It's been a difficult year so far, January was not a good month and although we stabilised the performance during February, we are not entirely happy.'

'We are not going to try and outperform ourselves though because it never pays off and we've been through these sorts of times before. These things have happened in the past and the lesson is to stick with the fundamentals.'

The AA-rated manager, who runs the firm's £51m Emerging Market fund, said that good stock selection is going to be critical to get through the next twelve months.

'Our profit is very bottom up driven so the outcome of the portfolio is ultimately down to stock selection. Stand by the companies who you believe are high quality, are valued reasonably, with good transparency and that you have confidence in.' he said.

'If you look at our portfolio you will find we are overweight in Latin America and underweight position in Asia. Asia is far more cyclical and the stocks in Asia at this moment in time are less transparent. Asian banks have some fundamental issues and the out look for change is very unclear which is why we don't find them very exciting. It's not that we are actually avoiding them, it's just that we don't find them exciting enough.'

'In general Asian banks have very strong balance sheets but there are some underlying issues. Korea for example is experiencing funding problems as loans are growing faster than deposits so they are having to borrow from elsewhere.'

Sliwinski said that he is placing a higher weighting in Latin America because he feels it holds some largely untapped opportunities.

'There are a lot of very interesting stock ideas in Latin America mainly because of the domestic sector. Strong consumer spending, the emerging middle class and an increased demand in property is driving this.'

Sliwinski admits that the current problems being experienced in the US will no doubt affect these areas but said he believes that the situation will not be as dire as some people imagine.

Overall he remains upbeat, albeit a little cautious, about 2008. He said: 'I would never forecast absolute return for the emerging markets but I do predict that the emerging markets will out perform the developed markets in 2008. It was easier before and now it is trickier, but I strongly believe that the sector returns will be strong.'

The Martin Currie Emerging Market fund delivered a return of 17.43% over a twelve month period to the end of January, versus a peer group average of 19.05%.

       
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