Gulf News spoke to Matt Gulley of Franklin Templeton Investments, one of the big names in emerging market investments on how far emerging markets have decoupled from the US and his outlook of the global equity market trends.
Gulf News: Do you think emerging markets have decoupled from the US?
Gulley: It's a very global landscape out there. From the trading perspective, and not an economic one, ten years ago, when you woke up in the US, you only looked at what the US was doing.
You looked at the Treasury bonds and got up and traded stocks. Today when the US wakes up, it realises there is China, India, the Middle East and Europe out there. That's the first thing they look at. The trade behaviours have changed.
I don't think you could ever say they [US and emerging markets] have totally decoupled. From the trading perspective, I will say they are always going to impact each other.
What will be the global trend in equity trading? Which markets will portfolio investments be heading for?
I wish I knew... We come in every day and see this swings in big liquid markets. In these big swings we see a lot of impact from short-term money. This [short-term] money can move very fast.
When you have $2 trillion of hedge fund money and it moves around this fast, and you are overweighed with derivatives, there is no one market steep enough to handle all that.
Merill Lynch has predicted that developing markets will be very volatile? Does that make developed markets safe havens for investment?
We all see where the growth is. The growth is still happening in the Indias and Chinas. I think that people around the world are going to run from those havens to where growth is taking place.
What is Franklin Templeton's projection?
We analyse the markets in different ways from a bottom-up basis. We look at individual stocks. We are not making a country by country projection.
We are making it on does the company [share price] make sense? Does it have the valuations to support its share price? And what we think are the catalysts of its future. We develop our investment based on how all this adds up.
What are your projections about the Gulf markets?
We are very optimistic. The Gulf markets are places where the world has an appetite to invest. They want products and I think they would also allow access to their high-growth markets.
