Sustainable plays in a diverging world
Diverging economic activity between EMs and DMs suggests that investors should look for opportunities in EM companies with credible sustainability characteristics. If most of USD strength is behind us, then EM companies with exposure to global markets could benefit from weak exchange rates before they start appreciating against the USD over the medium term – and those with exposure to India’s secular growth story should continue to perform well in the current environment. From a tactical perspective, holding a diversified basket of EM sustainable companies in various industries and countries could offer interesting upside for investors looking to gain exposure outside of traditional DM sustainability plays. In this context, SMS believes that companies such as Hero Motorcorp, Suzano and Klabin offer good value at a reasonable price.
Edition: 161
- 26 May, 2023