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ABN AMRO highlights emerging markets

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ABN AMRO Asset Management has said that 2008 should be the year of emerging markets, particularly in Asia.

 David Kiddie, CIO Equities at ABN AMRO, said: “There is a lot of market talk about risk aversion, fear and gloom, but that can also provide opportunities when investing in equities.”He sees the best opportunities in the emerging markets, especially in parts of Asia. Across the board, equity returns are likely to be in the high single digits, in line with long-term averages. Kiddie’s focus for 2008 lies on Asia, where economic growth should continue at what he calls a reasonable pace.

Equity valuations are on the whole attractive and most countries’ finances are strong, benefiting from domestic demand, rising wages and buoyant exports.Kiddie said: “Asian markets, and emerging markets in general, are under-represented in many investment portfolios and that should change in the next 5 to 10 years.“China looks overbought and faces the risk of a short-term correction as a result of further action by the monetary authorities to cool the economy and rein in inflation. For investors, that could be an opportunity to add exposure.”Looking at global sectors, financials – this year’s worst-performing sector – is approaching a point where these stocks are becoming interesting again after the battering over the sub-prime debt crisis and the losses on mortgage exposure, and the fallout from the credit crunch.

Kiddie added: “You can expect more bad news and more volatility for the sector, but within the segment there are interesting dividend yields in the banking and insurance industry.”

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