Barclays expects that global growth will pick up in the second half of 2015, benefitting emerging market (EM) exports and earnings. As growth improves, demand for EM goods from developed markets (DM) will increase.
According to Bloomberg, Barclays has increased its EM exposure to overweight from a neutral position by taking profits from Japanese equities, although it remains overweight in Japan.
The global asset manager believes that EM equities offer higher implied risk premium than DM equities, a scenario that has preceded previous outperformance in EMs.
Although international investors have been exiting EMs, which suggests that sentiment is negative, Barclays suggests that the financial and cyclical sectors are not as richly priced as the defensive sectors, providing opportunity for investors.
In increasing its exposure to EMs, Barclays has added the Turkish bank, Akbank; the Polish bank, Powszechna Kasa Oszczednosci Bank Polski S.A. (PKO); the Korean bank, Shinhan Financial Group; and the Mexican multinational building materials company, Cemex to its global recommended portfolio and removed Daiwa House, Mitsui Chemicals, Toyota and Kraft.