After a decade of underperformance and as investors diversify out of US assets, Anna Mulholland at Geneva-based Pictet Asset Management discussed in an interview with this news service why it is a good time to diversify into emerging market equities.

It's time to start showing emerging market equities more investment love, so a Swiss private bank argues.

Anna Mulholland (pictured), head of research and management of emerging market equities at Pictet Asset Management, says emerging market equities remain undervalued compared with developed markets.

With growth in emerging market economies accelerating and the dollar weakening, Mulholland believes that emerging markets are poised to benefit as investors diversify out of US assets.

Emerging markets, such as India, are some of the world’s fastest advancing economies, with digitalisation and decarbonisation acting as key drivers.

Mulholland - speaking exclusively to WealthBriefing and WealthBriefingAsia - sees opportunities in the transition towards renewable energy, with emerging markets rich in natural resources and some with climates suited to solar power. “China, for instance, plays a key role in renewables, notably in solar power,” she said in an interview in London. While China still relies on fossil fuels, particularly coal, it produces more than 80 per cent of all solar photovoltaic panels, half of the world’s leading electric vehicles and a third of its wind power. The country aims to have 80 per cent of its total energy mix from non-fossil fuel sources by 2060.

Mulholland also sees huge opportunities in countries such as China and South Korea on the tech side, notably e-commerce, internet services, artificial intelligence, robotics, and cloud computing. Some of the world’s largest semiconductor companies are found in Taiwan and South Korea for example. She is also heavily exposed to financials in emerging markets.

Mulholland is overweight in the Philippines, notably in financials. She is also overweight in Indonesia, Vietnam, Argentina, Mexico, Brazil, Greece and Poland. She is neutral on Korea and China and slightly underweight in India, mainly as the latter is an expensive market. Top stock picks include India’s tech company InfoEdge, Indian asset manager 360 One and Vietnam’s IT company FPT Corporation.

Despite a series of trade threats made by US President Donald Trump last week, starting with the delivery of letters to 14 nations, including South Korea, announcing that higher tariffs would be introduced on 1 August unless further concessions were made, she believes that Trump would rather negotiate and make deals than not do so. But she acknowledges that it is a difficult time and is monitoring the situation.

Mulholland is not alone in her views. Other investment managers, such as French asset manager Amundi and Eastspring Investments, also think that tariffs and significant US policy uncertainty will dampen global growth, with Asian and emerging markets expected to benefit from diversification needs and a weakening dollar (see here.)