Emerging markets underperformed developed markets

Good performers for the portfolio recently included Merida Industry, which is benefiting from strong sales of high-end bicycles in China, and Sunny Optical, a manufacturer of camera apertures and lenses for mobile phone cameras. It added value as it continues to profit from the demand for higher specification cameras where its margins are greater.

Other Chinese holdings that fared well recently included Sino Biopharmaceutical, which reported good numbers, and Prince Frog, which manufactures and distributes childcare products and household hygiene products. Prince Frog has reported strong annual numbers recently marked by 30 per cent growth in revenues.

Beyond China, Mexico’s Empresas Ica was the best individual performer for the portfolio, being a clear beneficiary of the Mexican government’s efforts to enhance the country’s infrastructure.

Emerging markets underperformed developed markets in the first quarter. In part this has been due to the strength of the dollar, with liquidity moving back into the US at the same time that currencies elsewhere are weakening.

Emery Brewer is co-manager of the J O Hambro Capital Management Emerging Markets fund