Press use only
15 November 2012
20122012ovember
2011 September
2011
Column
Author: Maarten-Jan Bakkum
AUTHORS: vALENTIJN
The sky is clearing above the emerging world
For almost two years, the emerging markets have lagged behind the developed markets. In
September, the emerging markets suddenly began to perform better, thanks to an upturn in
Chinese growth figures and the first signs of worldwide cyclical recovery. More than two
months have passed since then and we can slowly start to speak of a new trend.
The main problem in the past few years has been China. Growth there slowed down significantly, from 12% in 2010 to
7% this year. This reinforced concerns in the market about the vulnerabilities in the Chinese financial system. Within a
short space of time, China went from being the biggest driver to being the biggest threat to growth in the emerging world.
There were other issues that clouded the emerging markets’ prospects - reform fatigue and in some cases a worsening of
economic policy in important countries such as India, Brazil and South Africa - but China remained the dominant negative
factor.
Since the summer we have witnessed an improvement in the economic figures in China, mainly as a result of the new
round of stimulus policies by the central government. Investments in infrastructure and the housing market have clearly
led the way to improvement once more. This means that prospects for growth in China have improved, in any event for
the coming quarters. Ongoing weakness in the global economy, the significant problems in the Eurozone (China’s biggest
trading partner), the expected contraction in the Chinese labour market and the rapid increase in the debt ratio in the
Chinese economy since 2008 are all good reasons to assume that the current growth acceleration cannot last long.
China finds itself in a structural slowdown in growth that has only just begun.
Despite this, it is important that growth picks up in the interim and that the slowdown does not persist, for the time being.
This will put any fear of a potential systemic crisis in China on the backburner. This is good news for the entire emerging
world, which is so sensitive to Chinese growth prospects. It removes an important risk, in any event for some quarters to
come, and increases the likelihood that the positive performance trend vis à vis the developed markets, which started in
September, can continue.
In addition to an improvement in China, there is also a clear cyclical recovery visible in most of the other emerging
markets. It seems as though August saw the bottoming out of economic growth. Besides this, there is plenty of room in
the financial conditions almost everywhere in the emerging world, which instils confidence in economic growth and capital
flows to stock markets in 2013. All in all, the prospects for the emerging markets have improved significantly during
recent months. China remains a risk, but in the coming quarters the upturn in Chinese growth will ensure that the
concerns about a hard landing are moving into the background.
END
E
Press contacts
Karl Emerick Hanuska
ING Investment Management
T
+31 70 379 1182
M
+31 6 83647648
E
karl.hanuska@ingim.com
E
Caroline Wroblewski
ING Investment Management
T
+31 70 378 1281
M
+31 6 30485111
E
caroline.wroblewski@ingim.com
About ING Investment Management
ING Investment Management (ING IM) is a global asset manager with approximately EUR
€316.0 bln* (USD 408.5 bln*) in assets managed for institutions and individual investors
worldwide. As the principal asset manager of ING Group, a global financial institution of Dutch
origin, ING IM employs over 2,100 staff and is active in 25 countries across Europe, America,
Asia and the Middle East. ING IM applies its proprietary research and analysis, global resources
and risk management to offer a wide variety of strategies, investment vehicles and advisory
services in all major asset classes and investment styles.
Visit www.ingim.com for more information.
*Figures as of 30 September 2012. The total Assets under Management are reported with the inclusion of
ING IM Japan & ING IM Singapore but exclude the remaining Asian Investment Management (IM) businesses
of which the results are reported as ‘Net result from discontinued operations’.
ING INVESTMENT MANAGEMENT
COLUMN
2