Emerging Markets in good position to withstand credit crunch

Despite the market sell off, SWIP's medium to long term outlook on Global Emerging Markets remains positive.

According to SWIP's proprietary research, the asset class is characterised by countries with strong foreign exchange reserves, low corporate debt and high household savings. As a result, many of the countries in the developing world are benefiting from their comparatively strong financial positions and represent long term investment opportunities.

Kim Catechis, Head of Global Emerging markets, at SWIP comments: "The financial credibility of the whole region has come on leaps and bounds in recent years. In Latin America this was evidenced earlier in the year when Brazil had its sovereign debt upgraded to investment grade."

In the short-term, SWIP says, volatility is likely to persist and investors are still very risk-averse. However, in the medium to long term, emerging market equities are well placed. Compared with prior financial crises, developing countries are in a much stronger position. This time round the world is relying on the likes of China and India for growth. This is actually an excellent opportunity for longer term investors.

Kim Catechis adds: "From a valuation perspective, emerging markets have become much more attractively priced. Towards the end of last year, this discount had all but disappeared and some of the more highly valued markets, such as China, were actually trading at a premium to developed markets. Now, emerging markets equities are trading at a discount to their developed counterparts. Investors with a longer term outlook have the opportunity to access world class premium growth companies, offering the potential of superior earnings growth and significant returns on investment."