In a recent interview with Bloomberg Television, Norman Boersma, the Chief Investment Office or Templeton Global Equity Group, which has $130 billion in assets under management, provided his insights about developed and emerging market stocks.
Mr. Boersma considers that even though the Fed and the central bank of Japan are easing their policies, still the quantitative easing means that just less money being pumped into the system, as opposed to a reverse action and this move is still supportive for equities.
Currently Templeton has an “Underweight” rating for Emerging Markets stocks and “Overweight” for European stocks for the five-year horizon. Mr. Boersma stated that the rating for European stocks was set a couple of years back, when the European Central Bank President, Mario Draghi, said that they are going to support the peripheral countries.
“Stocks were unbelievably cheap back then. Nobody else really wanted to look at European stocks and if you had a five year view you would look basically out far enough and you would see the growth coming. […] Today a little less so, but still many good opportunities there.” Mr. Boersma pointed out.
However, this is not the case with the Emerging Markets, where people are just starting to really push the equities down, they are started to get interested, according to Mr. Boersma. In this way, Templeton has purchased some stocks in China and Russia, but there aren’t as many opportunities as have been a couple of years ago in Europe. However, Templeton is focused more on individual companies rather than on entire markets while picking their investments.
“We’ve been buying a little bit in China, a little bit in Russia, but we are certainly not finding the same magnitude of opportunities that we found a couple of years ago in Europe. […] In Russia there are really a couple of cash flow stories that are more in the material side of things and they benefit from a cheaper, weaker Rubble. […] In China there is a wide gambit of different types of companies,” Mr. Boersman said.
Watch the full interview below: