Firstly, it would be a mistake to confuse issues in emerging markets as a fundamental problem for developed markets. My personal view is the recent selling we have seen in developed markets, most notably the USA, UK, Japan and Australia, driven by those investors with large emerging market losses, is a buying opportunity in the right developed market equities.
Improvements in the developed economies
If anything, developed market economic data continues to improve. Global growth is being revised up, led by developed countries, while emerging market currencies are having their legs chopped off by a combination of the FED’s QE tapering and increased political risk at a country-specific level. So my point is – keep focused on developed market opportunities in an emerging market led correction.
On that point, this week we again saw UK GDP grow. UK GDP rose 0.7% to an annualised rate of 2.9% in the fourth quarter. The aggressive monetary policy of the Bank of England, under new governor Canadian Mark Carney, is working to spur increased cyclical activity and, particularly, home building.