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.

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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)

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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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