A New Wave of Emerging Market Opportunities

18 February 2020
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A New Wave of Emerging Market Opportunities
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      | Head—Emerging Markets Equities
      Transcript

      The way to think about emerging markets is changing and oftentimes people don’t fully realize that. It used to be that [the] emerging market was the factory to the world. It’s where they made cheap stuff for the developed markets. But that’s changing.

      Even in the developed world, we’re seeing that the importance of intangible assets are rising as we shift towards a knowledge-based economy. Now, that’s actually also true in the emerging markets. In fact, in some sense, it is even more true that they are ahead of the developed markets in some sense. And we call these emerging markets “leapfroggers.”

      In the case of online retailing penetration or online banking penetration or digital payment penetration, China is already ahead of the United States. We think that trend is likely to continue. And you want to be exposed to the winners.

      I think one of the really exciting developments for global investors is the availability of China A-shares. The China A-share market is still highly dominated by local retail investors. And as a result, it is still very inefficient. So professional managers should be able to capitalize on that. Now, typically, when you have inefficient markets, they tend to have very little liquidity and we can’t really invest in them. But this is a unique scenario where the market is still inefficient but there is a lot of liquidity, so we can deploy a lot of capital. And there are a lot of really interesting, attractive companies that have become investable now.

      We find interesting and well-run businesses everywhere across the emerging world. In particular, I would highlight India. China gets all the air time [so] that perhaps people tend to forget about the second largest emerging market economy out there—which is India, which also offers a really diverse set of companies.

      It used to be that finding data and information was an important part of the investment process because that was difficult to do. In today’s world, data is ubiquitous. Information is everywhere. That’s not a precious commodity anywhere anymore. And perhaps one of the most precious commodities today is patience. And I believe that investors should really be focusing much more on patience.


      About the Author

      Sammy Suzuki is Head of Emerging Markets Equities, responsible for overseeing AB’s emerging-markets equity business and instrumental in the formation and shaping of AB’s Emerging Markets Equity platform. He was also a key architect of the Strategic Core platform and has managed the Emerging Markets Portfolio since its inception in 2012, and the Global, International and US portfolios from 2015 to 2023. Suzuki has managed portfolios since 2004. From 2010 to 2012, he also held the role of director of Fundamental Value Research, where he managed 50 fundamental analysts globally. Prior to managing portfolios, Suzuki spent a decade as a research analyst. He joined AB in 1994 as a research associate, first covering the capital equipment industry, followed by the technology and global automotive industries. Before joining the firm, Suzuki was a consultant at Bain & Company. He holds both a BSE (magna cum laude)  in materials engineering from the School of Engineering and Applied Science, and a BS (magna cum laude) in finance from the Wharton School at the University of Pennsylvania. Suzuki is a CFA charterholder and was previously a member of the Board of the CFA Society New York. He currently serves on the Board of the Association of Asian American Investment Managers. Location: New York