Cash in on change in emerging markets

After a strong start to 2019, emerging-market equities have hit turbulence. Professional investor Chetan Sehgal tips the stocks to back.

Each week, a professional investor tells us where he'd put hismoney. This week: Chetan Sehgal, Lead PortfolioManager, Templeton Emerging Markets Investment Trust.

After a strong start to 2019, global and emerging-market equities have hit turbulence thanks to changing US Federal Reserve policy and ongoing US-China trade-related negotiations or tweets. Against this volatile backdrop we continue to search for companies with sustainable drivers of earnings growth that can withstand ongoing market uncertainty.

Domestically orientated businesses may be well positioned to benefit from structural demand drivers, such as the confluence of technology and consumption in e-commerce, or consumers' need for financial services.

Seek out Korea's top search engine

Naver (Seoul: 035420)

Naver is also among the leading payment companies in both Korea (Naver Pay) and Japan (through its social-media subsidiary, Line). It is thus facilitating e-commerce growth as well as benefiting from it. Reflecting the success of this online ecosystem, Naver was ranked ninth on Forbes' Most Innovative Companies listin 2018.

A boost for Brazil

Banco Bradesco (NYSE: BBD)

The company is leveraged to the economic recovery, benefits from a concentrated banking sector and gains from an extensive retail-distribution network that provides exposure to household spending. Ongoing government-led reforms are also expected to unlock demand for corporate lending.

Roaring ahead in Russia

Sberbank (Moscow: SBER)

Smaller competitors without access to the state deposit insurance system have fallen by the wayside as they have struggled to attract retail depositors. Sberbank has a strong focus on technology, dominating peer-to-peer transfers and card issuance, while its online mortgage app and e-commerce business are growing. An emphasis on reducing costs (by closing retail branches, for instance) is improving overall efficiency and margins.

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