Investments in emerging markets are attractive, especially when developed economies are experiencing slow growth or low yields. In this edition of CONNecting with Conning, Gulen Tuncer evaluates investment opportunities in emerging markets for insurance companies. She is CFA and Director and Research Analyst at Conning, responsible for Corporate and Emerging Market Bond Research.

Ms. Tuncer noted the many events that impacted the market last year, including U.S. elections, quantitative easing programs by the U.S Federal Reserve, European Union and Japan, and lower oil prices. These were compounded by other events such as the Russia-Ukraine conflict and economic sanctions against Russia that followed, as well as elections in Brazil and corruption probes into Petrobras. Despite market volatility, Ms. Tuncer says emerging markets performed quite well in 2014.

While emerging markets have come a long way since the late ‘90s, Ms. Tuncer says “… volatility is here to stay due to idiosyncratic risk and market technicals.“ The factors used to rate the different countries include: external debt levels, a commitment to reform, and a healthy level of reserves compared to financing needs. According to Ms. Tuncer, “… countries that fit this profile provide better diversification to investors. “

Ms. Tuncer believes countries offering the most opportunity “are committed to reform agendas in an environment where economic growth is weak, there is currency weakness, and potential inflationary pressures.” Countries offering good investment opportunities include Columbia, Indonesia, Mexico, and to a lesser extent the Philippines.

For more on investment strategies, visit the Conning website. If you missed any of our previous CONNecting with Conning programs, watch them now from the WRIN.tv On Demand Library.

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