Latest news with #NinetyOne
CNBC
2 days ago
- Business
- CNBC
Fund managers are pouring money into emerging markets. Here's where investors see opportunities
Volatility has gripped global equity markets this year — and according to some asset managers, now could be the perfect time to rethink emerging markets. Developing economies were hit particularly hard by U.S. President Donald Trump's so-called "reciprocal tariffs" plans when he unveiled them in April, with Sri Lanka, Cambodia and Vietnam slapped with tariffs of 44%, 49% and 46%, respectively. The end of a 90-day pause on the new tariff rates is looming, with the country-specific duties set to come into effect on July 8 — but according to Bank of America's Fund Manager Survey, institutional investors aren't convinced the sky-high rates will hold. BofA's most recent Global Fund Manager Survey noted that investors were pivoting to emerging markets, with allocation to equities from these developing economies now at its highest since August 2023. The survey polled 222 fund managers, who collectively manage assets worth $587 billion, between June 6 and June 12. Investors included in the survey were net 28% overweight emerging markets stocks, compared to a net 11% overweight the previous month. "Asked on their expectation for the final tariff rate the US would impose on all imports from trading partners, 77% anticipated a duty rate of lower than 82%, and only 1% expect it above 30%," BoA analysts said in the report. "Altogether, the weighted average US tariff rate is expected at 13%." Investment banks themselves are also jumping into the ring. On Tuesday, Goldman Sachs announced the launch of its Emerging Markets Green and Social Bond Active ETF. The fund invests mainly in emerging markets corporate and sovereign fixed income securities, where the issuers intend to allocate use of the proceeds to green and social projects. It will be listed on exchanges including the London Stock Exchange, Borse Italiana, Deutsche Börse and SIX. 'EM-ification' of developed markets Widespread tariffs on imports to the U.S. will be a negative for all asset classes, according to Archie Hart, a co-portfolio manager focused on emerging markets at asset management giant Ninety One. However, he argued that the "EM-ification" of developed markets could bring emerging markets to the forefront as investors seek opportunities in a world of volatility. "The economic policy and central bank policy in [emerging markets] has been pretty pragmatic," he told CNBC. "They've been pretty conservative. They raised rates first when inflation came in, they're generally running deficits which are less than some in developed markets, whereas we've seen more volatile economic policy out of [developed markets]." Major equity markets across the U.S., Asia and Europe have been impacted by the rapidly changing trade policy announcements coming out of the White House. Ninety One's Hart said that in recent months, confidence in developed markets' institutions and policymaking had taken a hit, and investors were starting to question long-held positions . "You have developed markets which, particularly in relation to the U.S., are very crowded trades," he explained. "Everybody's there, and valuations are towards the top end of historical levels. We have emerging markets which have been very much out of favor, with valuations very low versus historical levels." He said in the short term there was volatility across global assets of all classes — but argued that the long-term picture for emerging markets looked bright, given the cheaper valuations, the "uncrowded and underowned" nature of the market and increasingly transparent policy making. Where are the opportunities? Meanwhile, BofA said on Monday that it was moving to overweight on Uzbekistan external debt, referring to sovereign debt held by foreign investors. "The country benefits from high gold prices, which we see moving even higher in the near future, supporting the current account, fiscal balances and FX reserves," the bank's strategists said in a note. "Progress is being made on energy tariff reform, further supporting the budget and reducing sovereign borrowing needs. We also see a full rating upgrade this year on the back of S & P's and Moody's positive outlooks over the past few weeks." It came after JP Morgan on Friday also suggested investors consider putting money in Uzbekistan. In a note, researchers from the investment bank downgraded Dubai real estate bonds and advised: "We would instead recommend investors switch into geopolitically stable Uzbekistan for similar or higher yields." Bordering five countries including Kazakhstan and Afghanistan, Uzbekistan has seen average annual GDP growth of 5.3% since 2017, according to the World Bank . Elsewhere, Greg Luken, founder and president of Tennessee-based Luken Wealth Management, also told CNBC he saw plenty of opportunity in other emerging markets. "Emerging markets have long been the redheaded stepchild of asset allocation, receiving 2% to 4% allocations from most firms," he said in an email, noting that things were nevertheless changing. "With favorable demographics and huge discounts relative to U.S. markets based on price-to-sales, price-to-earnings, emerging markets still represent a good value and why we've had outside allocations all year and continue to do so. India, Brazil, and China still have significant upside potential," he said. Deutsche Bank has also argued the case for some of those countries in recent weeks. In a May note, Mallika Sachdeva, a London-based strategist at the German lender, and Peter Sidorov, a senior economist, argued that "the time for the Global South is now." They defined the Global South as a bloc of more than 130 countries including India, South Africa, Bangladesh, Pakistan, Vietnam and Saudi Arabia. Various tailwinds are at play for the Global South, Sachdeva and Sidorov argued. These include shifting demographics — with the region expected to be home to more than 70% of the global workforce by 2040 — its position in global supply chains, and the fact that it accounts for 20% of the world's nominal GDP (gross domestic product). Deutsche Bank's top 10 Global South countries for investors to watch were India, Indonesia, Brazil, Mexico, Saudi Arabia, Egypt, the Philippines, Vietnam, Turkey and the UAE. The Philippines and Vietnam were tied in seventh place. "Developed international markets have historically moved in fits and starts," Luken Wealth's Luken told CNBC. "Emerging markets even more so with more volatility. All this could be the beginning of a new phase, different from the last four decades; it's too soon to tell. But even though it's too soon to tell, that doesn't change what we should be doing today."
Business Insider
4 days ago
- Business
- Business Insider
Ninety One upgraded to Neutral from Underweight at JPMorgan
JPMorgan upgraded Ninety One (NINTF) to Neutral from Underweight with a price target of 178 GBp, up from 132 GBp. Following the first positive net flow print since March 2022, an improving backdrop for an eventual return of investors back to the emerging markets, EM, asset class, and a very strong performance of MSCI EM year-to-date, the firm points to evidence of an inflection point for Ninety One's net flows and assets under management growth, the analyst tells investors in a research note. The firm adds however that given the recent very strong performance of the stock and geopolitical risks remaining prevalent, it will need to see much better flows than the ones embedded in its updated forecasts for the shares to outperform from current levels. Confident Investing Starts Here:
Yahoo
4 days ago
- Business
- Yahoo
Ninety One to complete Sanlam Investments UK transfer
Ninety One is set to finalise the transfer of Sanlam Investments UK's active asset management business to Ninety One UK today (16 June). The move is part of a broader agreement between Ninety One and Sanlam, positioning Ninety One UK as the primary active asset manager for a portion of Sanlam Investments UK's assets under management. Initially announced in November 2024, the agreement designates Ninety One as the primary active investment manager for Sanlam's single-managed local and global products. The alliance also formalises a 15-year relationship between the two firms through various operative agreements concluded in March 2025. As part of the arrangement, Sanlam will receive 125.7 million shares in Ninety One, translating to a 12.3% equity stake. Excluding ARC Financial Services Investments, Sanlam's effective shareholding in Ninety One will be approximately 8.9%. Additionally, Sanlam will become an anchor investor in Ninety One's international private and specialist credit strategies. Ninety One, originally from South Africa with a global footprint, hopes to benefit from preferred access to Sanlam's distribution network. The alliance is expected to expand Ninety One's market reach and accelerate its international private credit offerings. Announcing the deal in November, Ninety One founder and CEO Hendrik du Toit said: 'We are looking forward to a long and fruitful relationship with Sanlam, a business with a powerful brand and significant scale in South Africa. 'Our experience and expertise are complementary. This agreement will give us the opportunity, as leaders in our respective markets, to create additional value for our stakeholders.' Last week, India's Shriram Group launched its wealth management venture by collaborating with Sanlam Group, focusing on serving India's affluent and high-net-worth individuals. The equally shared joint venture, branded Shriram Wealth, targets Rs500bn ($5.84bn) in assets under advice and plans to onboard 500 wealth management experts within five years. "Ninety One to complete Sanlam Investments UK transfer " was originally created and published by Private Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Maverick
09-06-2025
- Business
- Daily Maverick
Capital vs trade: The stark economic divide threatening South Africa's future prosperity
Dr Michael Power recently retired from Ninety One where he was the Global Strategist for most of the past two decades. He remains a Consultant to Ninety One. Prior to Ninety One, he had worked in London, South Africa and Kenya for Anglo-American, Rothschild, HSBC Equator and Barings. He has a PhD from UCT, a master's from the Fletcher School at Tufts and a bachelor's from Oxford. His primary focus today is doing research into the emerging field of geo-economics focussing in particular on the global implications of the return of the economic centre of gravity to a China-centred Asia. In an international context and given the type of factory jobs that our pool of unemployed labour would be qualified to undertake so they might manufacture products for export, most of our available labour reserve is currently priced out of the global wage hierarchy. Last month, under the series title 'Elegy of a Tragedy Foretold ', Daily Maverick kindly published my Ninety One swansong. Central to my thesis was that the US has become addicted to breathing the heady 'Atmosphere of Capital', a dependency that has correspondingly damaged US Inc's ability to participate meaningfully in the lower pressure of the 'Atmosphere of Trade'. Result? Severe damage has been inflicted on US Inc because of capital inflows hijacking the US dollar to a far higher level than would allow US Inc to prosper in that Atmosphere of Trade. In essence, the US has contracted a severe case of the Dutch Disease. But the American variant has resulted not through exporting a commodity like oil or gas, but through exporting its currency in the form of a US Treasury Bill. In a 2019 Financial Times opinion titled ' How to diagnose your own Dutch Disease ', Brendan Greeley noted that 'around 1980 the United States discovered that it was the Saudi Arabia of money'. (To understand my American thesis more fully, it might be useful for the reader to refer back to this five-part essay which can be found here: Part 1, Part 2, Part 3, Part 4 and Part 5.) The core of my proposition is that even as the US might appear to 'win' through its capital account surplus (65% of the MSCI's ACWI equities index is weighted towards the US), America is 'losing' through its trade deficit (65% of the world's current account deficits in 2024 were created by the US). Profoundly negative Structurally, America's trade deficit losses have had a profoundly negative effect on the economic framework and wellbeing of the US… as well as visibly poisoning American politics. Indeed, as was foretold in JD Vance's 2016 book 'Hillbilly Elegy ', the divisive political tragedy now playing out in America has its roots in this capital account rich/trade account poor paradox. It has occurred to me that South Africa might have suffered a not too dissimilar fate to the US. Have we also become a country where the capital tail wags the trade dog? Despite the standard definition, our variant of the Dutch Disease has not happened because South Africa — by being mostly a commodity exporter — has caught the original version of the Dutch Disease. That occurred when a high percentage of the Netherlands' exports and so trade account earnings were commodity-related; in the Dutch case, the infection was caused by North Sea gas. In the 1970s, when an oil and gas price bonanza dramatically drove up Dutch terms of trade, so dragging the value of the Dutch guilder considerably higher as well, the industrial export sectors of the Netherlands became uncompetitive, and deindustrialisation swiftly followed. South Africa's variant of the Dutch Disease is closer to that contracted by the US. Given the precarious economic status that a liberated South Africa inherited in 1994, our recurring and so structural current account deficit has meant that, were we to avoid a currency crisis, we needed to attract meaningful foreign money inflows via our capital account to offset our underlying trade and current account deficits. The inflows we attracted have not, to any material degree, been foreign direct investment (the FDI that builds factories, so creating jobs), but rather mostly foreign portfolio investment (the FPI directed at our equity and bond markets). And a material share of these FPI inflows went into Government Bonds to help fund South Africa's ongoing budget deficit. (This speaks to why maintaining South Africa's Sovereign Debt Rating as high as possible — it is currently BB- or BB2 — is such a sensitive issue for our Treasury and Reserve Bank.) Yet for SA Inc, these foreign portfolio investment inflows have very possibly distorted the South African rand's valuation in foreign exchange markets, keeping it materially higher than it would otherwise have been had the quantum of those inflows not been forthcoming. De-industrialisation As a result, since 1994 (or more precisely 1995 when South Africa joined GATT, now the WTO, thus removing what little remaining protection our domestic industries had against foreign competition), echoing what happened in the US, South Africa de-industrialised. (So keen were we back in 1995 to fall into line with GATT's provisions to 'open up' that South African industrialist Leslie Boyd bemoaned that we 'outGATTed GATT'!) So what has been the fallout? We now have probably the highest unemployment rate in the world. Each week The Economist publishes the key economic metrics of the top 42 countries in the world. South Africa's stated unemployment rate — 32.9% — is over three times the next highest country's rate: Spain with 10.9%. I have long maintained that, in an international context and given the type of factory jobs that our pool of unemployed labour would be qualified to undertake so they might manufacture products for export, most of our available labour reserve is currently priced out of the global wage hierarchy. Like for like, South African wage rates for semi-skilled labour, when measured in Bangladeshi taka or Sri Lankan rupees, are very uncompetitive. Our minimum wages rates are 2.3x those of Bangladesh and 4.2x those of Sri Lanka. I am sure most readers of Daily Maverick will find the consequences of my logic — that even if the South African rand is fairly valued by markets in the Atmosphere of Capital, it is significantly overvalued in the Atmosphere of Trade — hard to stomach. I know — having worked in South Africa's fund management community for more than 20 years where we lived, breathed and even spoke the language of the Atmosphere of Capital every day — many of my erstwhile colleagues take issue with the implications of my reasoning. (For every 20 opinions on why the rand 'should be stronger', there was only ever one opinion about how to reduce South Africa's unemployment!) But I fear this sharp difference of opinion only goes to highlight South Africa's two-tier economy: that stark division between our 'haves and the have nots'. This gulf gives us the highest wealth inequality (as measured by the Gini coefficient) in the world. It is telling that, in that same ranking, other rand monetary area nations, Namibia and Eswatini, rank 2nd and 4th respectively; Botswana — whose currency basket is estimated to have a 50% rand weighting — is 5th. At the risk of oversimplifying, we 'haves' prefer to breathe the Atmosphere of Capital. We benchmark our values — in both senses of the word 'value' — against Western metrics. Indeed, most of us seem largely unaware that there might be another 'atmospheric pressure' out there in today's world that other regions of the non-Western world breathe. (Perhaps we might encounter that 'thinner air' — that relative cheapness — were we to holiday in Kenya or Indonesia.) Economically relevant Still, most of South Africa's 'have nots' have no option but to stay tied up in the straitjacket of the Atmosphere of Capital when — if they were to stand a chance of being globally economically relevant by securing an export-oriented job — they should instead be allowed to breathe the Atmosphere of Trade. And whether South Africa's 'haves' and even its 'have nots' realise it or not, the metrics determining the atmospheric pressure of the Atmosphere of Trade are not made in America or Europe, but in Asia or, even further north of us, in East and West Africa. South Africa is a heavily 'financialised' economy, a telltale sign that might indicate we breathe the Atmosphere of Capital rather than that of Trade. The JSE's market capitalisation as a percentage of GDP — at 321% in 2022 — is the second highest in the world. Only Hong Kong — with its raft of Chinese listings trading on the HKSE's H-share platform — had a larger ratio: 1,110%. South Africa — the world's 39th largest economy — also has in value terms in the rand, the 20th most traded currency as well as having the 21st most traded bond market. These otherwise impressive financial statistics obscure the less flattering economic metrics that lie beneath: our depressingly low GDP growth, chronically high unemployment and rising national debt. Our glossy financial ratios also offer cover to the dire status of the economic debate in South Africa: the hard truth is that it has become sterile and is running out of ideas. Judging by our recent economic performance, to paraphrase an advertising slogan from Margaret Thatcher's 1979 election campaign, 'South Africa isn't working'. Why? Because in the precise words of that slogan, our ' Labour isn't working'. Yet few economic commentators in either our public or private sectors want to risk rocking our financial boat even if, deep down, the conventional — and now ossified — economic wisdom as to how we might better run our economy is in fact a critical part of our problem. In the end, I maintain it comes down to a stark choice: Should South Africa's economy be run so that it benefits those few of us living in the Atmosphere of Capital? Or should it be run for the benefit of those many that might have a better chance of succeeding breathing the Atmosphere of Trade? The unsavoury truth is that as things stand, our economic frog is slowly but surely boiling and doing so in sterile policy water. Yet to us 'haves', were we to remove those rose-tinted glasses we traditionally use to gaze fondly upon our Western idols, we would realise that the economic debate in the West has become stultifyingly sterile too. Boa constrictor logic There, the boa constrictor logic of deteriorating demographics plus stagnant GDP growth plus rising national debt is slowly but surely squeezing the life out of many Western economies. Taking on more national debt — which even the erstwhile prudent Germans have now opted to do — is surely but another step along the West's highway to hell. And Western bond markets — including those of Japan — are starting to hint to investors of what torment lies ahead. So too is the rising price of gold. My fear is that those who count in the formulation of South Africa's economic policy might read my words and either reject them out of hand… or simply ignore them. But then that is what happened in the US when Cassandras ranging from Bob Dylan to Vaclav Smil warned what would happen if the US were to deindustrialise. Yet so few US politicians or economists paid heed! (Cassandra was a Trojan Princess cursed by Apollo to be able to predict the future accurately, but have no one believe her.) It is essential that South Africa's policy makers listen to other views on how we might chart a more prosperous way forward. Most historians agree that it was Einstein who said: 'The definition of insanity is doing the same thing over and over again and expecting different results.' DM
Yahoo
07-06-2025
- Business
- Yahoo
Trump's tax bill is undermining the foundations of global finance
For decades, investors have been able to rely on a simple truth: the US bond market is a safe place to put money. When wars broke out, economies crashed or other calamities struck, money flowed into US Treasuries, as Washington's bonds are known, to protect wealth. As a result, the US has been able to rely on a ready supply of investors willing to fund the country's ever-increasing appetite for tax cuts and public spending. Investors wanted US debt and the federal government was only too happy to provide it. Not even half a year into Donald Trump's presidential term, however, decades of orthodoxy are being turned on their head. 'The US has generally benefited from demand for Treasuries from overseas investors. It's viewed as the global risk-free asset,' says John Stopford, a fund manager at Ninety One. 'The concern is that a lot of those beliefs or tenets about the US are being called into question, in terms of how reliable, how safe an investment are US Treasuries?' Offshore investors, battered by volatility and bewildered by uncertainty since Trump took office, are becoming increasingly wary of the US bond market. Returns have suffered as Trump's trade policies have weakened the dollar and the president's planned debt splurge has raised questions about just how sustainable US borrowing really is. The latest flash point is Trump's 'big, beautiful' tax and spending bill, which the Congressional Budget Office said would add $2.4 trillion (£1.8 trillion) to the deficit over the next decade. Elon Musk might have hogged the headlines this week with his outbursts against the bill but investors and traders are airing the same concerns, especially as higher deficits mean the US treasury will be asking them to buy more and more of its bonds. 'We're seeing it in the asset management community, some insurance funds, some pension funds, and foreign investors overall as well. It's just more caution in the buying, rather than a full-blown 'sell everything',' says Gennadiy Goldberg, head of US rates strategy at TD Securities. A crisis in the US bond market, or even just a slow ebbing of investor confidence and faith, could be the most profound and revolutionary legacy of Trump's second term. The US market and its currency might no longer offer the safe haven against risk, nor the anchor for markets worldwide. An end of this financial exceptionalism would mean higher borrowing costs for the US and pose a challenge to the entire American economy model. Moody's became the last major credit rating agency to strip the US of its gold-plated borrower status last month and analysts have raised the prospect of Trump facing his own 'Liz Truss moment' as investors baulk at his spending plans. For now, concern is centred around where all this fiscal ill-discipline will leave the US in the 2030s and beyond. So investors are shying away from longer-dated Treasuries with terms such as 10, 20 or 30 years, and parking their money in shorter-term bonds that mature in one or two years. 'I see investors who are even cautious about the five to 10-year space,' Goldberg says. If this caution turns to panic, then a meltdown – with worldwide consequences – isn't out of the question. 'If there was a big deleveraging that happened – and there was a big source of selling, whether it's from foreign investors or hedge funds or levered investors or basis investors – it could potentially overwhelm the system,' Goldberg says. Foreign investors are also having to contend with a big drop in the US dollar, which is reducing their returns. 'It's fine to see bond yields rise if the currency is stable or appreciating. That's not what we're seeing at the moment. We're seeing bond yields rise in the US, and actually the currency, on a broad basket, is about 10pc down from its highs last year,' says James Ringer, a Schroders fund manager. The lack of buyers and the potential glut of bonds raises the possibility, or 'tail risk', that the market could cease to function properly. 'That would mean sellers overwhelming buyers,' says Goldberg. This could drive a sharp surge in rates and force an emergency intervention from the Federal Reserve. 'That is the risk going forward – that the system is unable to function if something goes wrong,' he adds. At the moment, there's little prospect of a panicked sell-off – mainly because investors have so few genuine alternatives. America's star may be on the wane but it is still the brightest light in the sky. 'The US is absolutely a mass market in terms of marketable debt. The second and third closest markets are an order of magnitude smaller, so that makes it really difficult for a lot of these investors to really get away from dollars,' says Goldberg. 'There's just no place for them to go.' But equally, with Trump at the helm, nobody is ruling anything out. 'Even if it's a tail risk or something that's unlikely, because it's there at the back of people's minds, potentially they do begin to change their behaviour,' Stopford says. 'They do begin to think, 'OK, well, I should have less exposure to the US, I should have less exposure to the dollar, I should be looking for alternatives that are safer, more reliable.' 'That's not bond vigilantes speculating. That's just people making rational decisions based on concerns about risk.' Scott Bessent began the week by telling the world: 'The United States of America is never going to default. That is never going to happen.' The comments to CBS News were meant to reassure. But the sheer fact that the US treasury secretary had to spell out something that has been taken for granted for decades highlights the fact that the fundamentals of the US financial system have been shaken. Whether they go on to crumble depends on what Trump does next. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
