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EMs: With great challenges come great opportunities

From health and wellness to climate change and more, the COVID-19 crisis has spawned or accelerated compelling investable themes across a range of EM countries. Against that backdrop, four of Wellington’s EM equity portfolio managers share their latest insights.

Views expressed are those of the authors and are subject to change. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional or institutional investors only.

The developing world was the epicenter of the COVID-19 outbreak earlier this year, so it is ironic in a sense that we now see emerging markets (EMs) as such a rich source of COVID-related investment opportunities. From health and wellness to climate change and more, the unprecedented global health crisis has spawned or accelerated compelling investable themes across a range of EM countries. Against that backdrop, four of Wellington’s EM equity portfolio managers share their latest insights.

Liliana Dearth on health and wellness in China

We are seeing individuals across developing countries being more proactive with regard to health and wellness. With greater availability of information, individuals are empowered to search for their own answers, compare various options, and pursue better overall health care. This trend is reshaping traditional approaches and fueling rising demand for higher-quality services. This was evident on our last grassroots research trip to China in late 2019, where we conducted focus groups, in-home interviews, and surveys with consumers to understand their needs and aspirations in this area. There was a resounding desire to seek improved access to health care testing and monitoring. The Chinese government is playing an active role in supporting this goal by reallocating resources across higher- and lower-tier hospitals. When we translate these insights into investment ideas, we have targeted companies involved in diagnostic testing, including medical equipment manufacturers and independent clinical laboratories, which we think should benefit from increased outsourcing by hospitals.

On a similar note, we’ve also seen a greater emphasis on premiumization among Chinese consumers, particularly concerning food staples and food safety. Prior to COVID-19, we had already seen consumers in lower-tier cities begin to move away from…

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