We are all emerging investors now, says Sarasin CIO Monson

Emerging markets will be redefined and the term consigned to history, according to Guy Monson of Sarasin & Partners.

Guy Monson, managing partner and CIO at the firm believes ‘we are all emerging investors now’ and argues that ‘false boundaries’ between individual countries and sectors will begin to break down.

He said: ‘Our hunch is that the term ‘emerging economies’ will soon disappear, much like the phrase ‘e-commerce’ did when we came to realise that we are all consumers on the web.’

For Monson, the long awaited announcement on June 19^th of a more flexible Chinese currency came as further evidence of this trend and marked the beginning of a period of adjustment in Asian currency management.

The news was welcome, he said. ‘The un-pegging of the renminbi was the first starter gun that the big currency blocks are beginning to break up.’

'As currencies shift, they give more power to the emerging consumer which in turn drives enormous export demand from the west.’

He pointed out that Switzerland, Austria, Germany and the Czech Republic were currently topping manufacturing PMI tables - ahead of Asia. ‘The old world is driving the export boom and it is doing incredible things in the west, the situation in Germany now is similar to that of after reunification.’

Indeed, business in Germany is booming. Citing the example of the car manufacturer Rolls Royce Monson explained: ‘They have never sold as many cars in a half-year period as this year since the company launched in 2003.'

But despite this boom in productivity, markets continue to flip from risk on to risk off, a behaviour Monson observes to be ‘typical of the tail-end of major market trauma.’

He is convinced we are ‘sitting in a sweet spot that the market doesn’t want to recognise’, arguing that the market is ‘paranoid’.

For Monson, global large cap equities at their current levels present an ‘absolute bargain’ and with ‘astonishingly conservative' balance sheets he believes investors can expect ‘a wall of dividends’ from these companies.

The only catch is that you have to brave and ‘buy when the market is a little fearful.’