Global Investing

It’s not end of the world at the Fragile Five

Despite all the doom and gloom surrounding capital-hungry Fragile Five countries, real money managers have not abandoned the ship at all.

Aberdeen Asset Management has overweight equity positions in Indonesia, India, Turkey and Brazil — that’s already 4 of the five countries that have come under market pressure because of their funding deficits.¬† The fund is also positive on Thailand and the Philippines.

Devan Kaloo, head of global emerging markets at Aberdeen, says these economies have well-run companies that are well positioned to adjust and enjoy slightly higher return on equity (ROE) than their developed counterparts. He says:

The current shakeout is forcing companies to focus on margins and cut costs, which would bring benefits in the long term. Corporates are more profitable than DM… If you are brave, Turkey has some fabulously run companies.

Even in Russia — where the rouble is possibly the next target of fast money speculators — there are well-run corporates, such as retail chain¬†Magnit.

A guide to North Korean “elections” – due in March

Investors are bracing themselves this year for elections in all of “Fragile Five” countries and a number of other emerging nations that are adding political concerns to those economies already vulnerable to capital flight risks.

Perhaps a lesser-known political event that is coming up in 2014 is in North Korea, which will hold “elections” for its parliament on March 9.

The polls will elect members of the country’s rubber-stamping Supreme People’s Assembly for the first time since 2009 and also for the first time since Kim Jong-Un — the third generation of his family to rule the Stalinist state — took leadership in 2011.