J.P. Morgan Funds’ VP Insight on Markets: Europe, BRIC and South Africa

In a recent interview on CNBC, Andres Garcia-Amaya, JPMorgan Funds’ Vice President and Global Market Strategist, explained why he likes Europe better than the U.S. in terms of where to invest, and made his case for emerging markets. Let’s look into some of the highlights:

Europe is an earnings play, Mr. Garcia-Amaya states at the beginning of the interview:

“If you look at the U.S., earnings are 22% above their 2007 levels; if you look at Europe, they are 30% below their 2007 levels. Starting from a much lower base, I think earnings could grow at double digits, while here, in the U.S., they could grow at single digits”

India’s ETF, the WisdomTree India Earnings Fund (ETF) (NYSEARCA:EPI), go nothing but higher, one reporter stated. Although it pulled back a bit on today’s trading, it’s been actually really strong all year long. Is it over? – he asks – Has the valuation gotten to a level where you no longer like it?

India was both a value play and a momentum play, right with the elections, Mr. Garcia-Amaya considers.

“I think value is not as attractive as it was before; it’s kind of back to historical averages. It’s not expensive, but I do think that if [the new administration makes the changes that it said it would]… there could be some structural changes that could really propel earnings in India over the next couple of years. So I still like India, but not so much just for valuation, more for the earnings story there.”

Where do fund flows go? Most funds are investing in India right now. But where are they headed? Do they go to Brazil, China or Russia?

Russia looks, to Mr. Garcia-Amaya, the most interesting.

“Talking about valuation, that is the one place where valuation looks really attractive. China looks attractive from a valuation standpoint but (…) it could stay cheap for a long period or time.”

For its part, “Russia is starting to see some catalysts from the Ukraine situation starting to stabilize. Maybe not improve, but at least stabilize. So between China and Russia, I prefer Russia,” or Sri-Lanka, or Thailand, which continue to grow at attractive rates.

Finally, Mr. Garcia-Amaya addressees South Africa. He says that it looks a little bit expensive, and highlights that “they’re one of the countries within the Fragile Five that hasn’t addressed their current account deficit situation, similar to Brazil, so they benefit from lower rates here.” And it looks to be calm, but JPMorgan Funds’ Vice President thinks that they’re not out of the woods yet.

Watch the full video below:

Disclosure: Javier Hasse holds no interest in any ETFs or Funds mentioned

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