Fundsnet: Inflation Decrease is Good for Emerging Market Investment

Writing in his blog, Founder and Chairman of, a financial investment company, highlights predictions that the lower inflation rate is good for emerging market investment.

Leeds, United Kingdom, September 12, 2011 --( With the surprise announcement from the Office of National Statistics that inflation fell to 4.2 percent from 4.5 percent from the previous month, Simon Dixon cites F&C Asset Management’s prediction that emerging markets will present significant investment opportunities., has seen emerging markets become a popular form of investment, with over half of their client base investing in emerging markets or commodity funds. The ones that have persevered with emerging markets despite valuations being below the long–term trend, are likely to be thankful that they did. The decrease in inflation has opened the doors and if predictions are correct, emerging market equities could see a return of up to 15 percent for the rest of the year.

Mike Sell, manager of Thames River Emerging Asia Fund, recently commented that China in particular would be a good addition to any Portfolio, saying: "The long-term story for China is still intact and it is an increasingly important part of the Asia Pacific region.

"China deserves to be a large part of people's emerging market portfolios, either through a regional or GEM product."

Traditionally, emerging markets have been a little misunderstood by investors who have assumed the risks that come with investing in 1st world markets are the same in emerging markets. Emerging market investment normally represents long term gains rather than gains in the short term. This has not suited every type of investor.

“In 2003 many investors were disappointed by the returns from buying into Chinese internet companies.” Said a spokesperson for “Times are different now though, and providing a longer term view is taken by the investor, good returns should follow especially if predictions in Chinese equity prove correct.”

Investments in emerging markets are often likened to investing in the U.S in 1920. Over a 40 year period, investors would have seen a 10 fold increase. They also would have seen an 80% drop in the market in that time too.

The spokesperson continued: “With the economies of emerging markets developing and rising at a fast rate, we expect to see more investment in emerging markets for the rest of the year.”

The inflation decrease has made emerging market investment far more attractive than it was a month ago.

Fundsnet Limited
Simon Dixon
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