Emerging Markets  

JPM’s Eidelman looks to tech for emerging market returns

JPM’s Eidelman looks to tech for emerging market returns

Leon Eidelman, who jointly runs the £1.1bn JP Morgan Emerging Markets fund, is focused on the technology sector for returns.

He said emerging market consumers have “leapfrogged” their counterparts in developed markets in terms of using mobile payments.

Mr Eidelman said: “These are used now very broadly offline, not just for simple purchases of consumer goods.

"In China, we do have exposure to Alibaba and Tencent. Both internet companies have vast user bases (Alibaba 450 million users, Tencent over 900 million active users) and big ecosystems of products and capabilities are using big data to get a better understanding consumers and their financial habits.”

He remains keen on the shares, despite the strong share price performance this year, commenting that the earnings achieved by the companies have been far better than expected.

He said: ”We continue to like Alibaba for exposure to the broad consumer sector as a commerce enabler and Tencent as a proxy for growing entertainment demand with the ability to monetize through advertising and subscriptions.

"Their core businesses including e-commerce and gaming are performing well and newer areas like cloud computing and digital payments are at an earlier stage of growth.”

Mr Eidelman added: “Another stock which gives us exposure to the innovation of technology on everyday life is also in China.

"51job, is a leading online job listing and integrated human resource service provider. The company posted strong second results during August, exceeding market expectations, on the back of growth in online recruitment services revenue and margin improvement.

"The company also announced the acquisition of a 60 per cent stake in a Chinese job posting company, Lagou, which specialises in the technology space.”

Michael Biggs, investment manager for fixed income at GAM, said demand for credit from consumers and companies has picked up this year, following several years in the doldrums, and credit growth is typically viewed as an indicator of economic expansion.

John Greenwood, senior economist at Invesco Perpetual, said the primary driver of economic performance in emerging markets is demand from Europe and the US, rather than the outlook for China.

Paul Gibson, chartered financial planner at Granite Financial Planning in Aberdeen, said: “We adopt an evidence based strategic approach to asset allocation.

"Our emerging markets exposure is in line with market capitalisation and we don’t take positions on market timing or tactical asset allocation as it doesn’t work. We buy our exposure to emerging markets using low cost asset tracking funds.”

david.thorpe@ft.com