Roubini On Undervalued Countries (Premium)

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March 03, 2014
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Leading macroeconomic thinker sees upside in S. Korea, India and part of the eurozone.

Each week, ETF.com interviews leading macroeconomic thinkers and strategists on the regions, industries, currencies and commodities with the best outlook over a near-term (six-month) time horizon, along with ETF.com’s analysis of the best ETFs to implement these strategies. Subscribers to the ETF.com Alpha Think Tank newsletter get these insights delivered weekly to their inbox.

This week we talk to Nouriel Roubini, NYU professor and chairman of Roubini Global Economics, one of the most respected macro economists alive today, a regular at the World Economic Forum in Davos and No. 4 on Foreign Policy’s list of the “Top 100 Global Thinkers.”

Excerpted:

ETF.com: What's your favorite market right now? Where are you telling investors to focus their capital?

Roubini: I don’t think you can really say there’s one country, but there are lots of options. Let’s start with emerging markets.

There are plenty of emerging market economies that have good market fundamentals and international policies. In Asia, we particularly like South Korea, but even countries like Malaysia, the Philippines, Hong Kong or Singapore are solid. In Europe, countries like Greece that are covered by the recovery in the eurozone could be attractive, or countries like Poland and the Czech Republic can be good economic opportunities as well. 

In Latin America—rather than Brazil, which was over-hyped and now is correcting—there are good economic reforms generally in Mexico. Even in Peru and Chile, where the markets are weakening, economic fundamentals are strengthening. In sub-Saharan Africa, rather than South Africa, there is strong economic growth in places like Nigeria, Kenya, Mozambique and Angola.

So there are many different emerging markets that actually have better fundamentals than some of the fragile states we read about a lot. The question is, of course, Are these markets underpriced?

I would say some of the pricing may be off in places like Korea. Even among the more fragile economies, a number of them are enacting good economic adjustments—including Indonesia and India—that are not priced in.

 

 

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