As fear over the coronavirus disease (COVID-19) pandemic shakes out global financial markets, this may be a good time for investors to sift through the rubble and think of long-term positioning, top fund managers said.
“At a time when coronavirus-driven country shutdowns have exacerbated investor concerns, the crisis hasn’t altered our investment philosophy toward emerging market stocks. We continue to favor competitive, well-managed companies with long-term sustainable earnings power and attractive valuations,” Andrew Ness, portfolio manager at Franklin Templeton Emerging Markets Equity, said in a research note.
“Our approach has been calm and rational, without panic,” he said in an April 2 commentary titled “Navigating Emerging Markets During Uncertain Times: This Too Shall Pass.”
BPI Asset Management and Trust Corp. (BPI AMTC), the asset management arm of Bank of the Philippine Islands, said that while global economies and stock markets were reeling from the effects of the COVID-19 pandemic, the “red numbers on the board” might indicate a “prime bargain hunting season” for well-positioned investors.
“Investors are hedging their bets on which companies will bounce back quickly once the COVID-19 pandemic is over and when life returns with some semblance of normalcy, at which time they can then anticipate to enjoy the fruits of their liquidity,” BPI AMTC president Sheila Marie Tan said.
This current crisis is a lesson on proper investor risk profiling, BPI AMTC believes.
“It may seem like a scary time to invest, but investors can be assured that professional asset managers like BPI AMTC do take events like this into account in making investment management decisions every day,” Tan said.
Franklin Templeton, which has presence in 16 countries, does not believe that the current turmoil would create systemic banking crises in emerging markets.
“Banks are generally well-capitalized, and regulators have overall been doing a good job supervising markets. We believe when this crisis passes, banking stocks should remain well positioned to resume growth, given the low levels of credit penetration across the asset class,” Ness said.
Given the current conditions, Franklin Templeton prefers a diversified portfolio approach, focusing on good-quality businesses with long-term sustainable earnings power at a discount to their intrinsic worth.
“We look for well-capitalized companies and are cognizant of leverage; we prefer low or appropriately levered companies,” Ness said. —DORIS DUMLAO-ABADILLA INQ