Emerging market economies will "outperform significantly" in 2011 despite the first quarter slow-down in global growth, according to Skandia.
Although recent high oil prices and the Japanese earthquake may have dented global growth in Q1, Skandia Investment Group (SIG) remains bullish on emerging market equities and expects the global economy to perform robustly in the second half of the year.
"Although the performance of Emerging Markets has been relatively poor this year, we expect Emerging Markets (and in particular China) to outperform significantly once it becomes clear inflation has peaked and that we are near the end of the hiking cycle," said SIG chief investment officer James Millard.
SIG continues to be overweight in equities relative to cash and overweight in emerging markets. For May, it has a "very positive" outlook for equities in emerging Asia and is "positive" on emerging EMEA, LatAm and Japan.
Its asset allocation committee also remains overweight on non-government bonds relative to government bonds which it has given a "very negative" outlook for the month.
Millard added recent data suggests the Chinese economy may have achieved a "soft landing". While economic growth slowed in Q1 relative to the previous quarters, indicators such as the manufacturing PMI index point to the economy growing at a "trend like pace".
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