TEMIT Captures Growth Opportunities In Emerging Markets Amid Macro Headwinds

TEMIT Captures Growth Opportunities In Emerging Markets Amid Macro Headwinds

• Portfolio managers Chetan Sehgal and Andrew Ness highlight growth opportunities in emerging markets for the year ahead

London, 12 June 2023: Templeton Emerging Markets Investment Trust (TEMIT¹), the largest investment trust investing in the world’s fastest growing economies, is pleased to share its portfolio managers’ views on why emerging markets can be an attractive longer-term allocation, particularly as inflation soars in the UK.

“While we remain watchful for developments that could change our overall outlook, including China’s relationship with Taiwan and the United States, we find many reasons to be positive about emerging markets. Many countries are towards the end of the rate tightening cycle. Most markets in Latin America have traditionally had a significant real interest rate and their economic potential has been curtailed because of the need for macroeconomic stability,” said Chetan Sehgal, Lead Portfolio Manager, TEMIT.

Consumption spurring growth in emerging markets

Chetan continued: “The long-term structural tailwind of consumption growth in emerging markets via expansion of the middle class and premiumisation of buying patterns is now more significant than ever. Some $2.6 trillion in Chinese bank deposits were amassed in 2022 and middle-class households are looking to spend on experiences, products and services. In our view, China’s reopening could benefit many markets as the country has strong trade links with many emerging markets. Chinese tourism has also been a vital source of revenue for many countries.”

“Although the current global outlook remains weak, economies with a greater focus on domestic demand are better placed to weather this in the near term. Many emerging markets such as China, India, Indonesia and Brazil have huge domestic consumption bases and are well-positioned to remain resilient from external demand shortfalls.”

Emerging market companies offer exciting opportunities for growth

Andrew Ness, Portfolio Manager, TEMIT said: “We see companies with structural growth drivers aligned with digitalisation, decarbonisation and premiumisation emerging as long-term winners. These are well-managed businesses with robust balance sheets, operating in secular growth areas whilst trading at attractive valuations.”

At the forefront of the transition to net zero

“Companies in emerging markets are fighting climate change in multiple ways. Some are seeking to decarbonise in high-emitting sectors, while others are providing environmental solutions. There are companies employing technology to reduce carbon emissions, cutting high-pollution industrial activities, and pivoting their corporate strategy toward green businesses such as renewables and electric vehicles,” Andrew said.

“These companies are also not always behind their developed market peers in ESG disclosure, with some even being more transparent. Market-wide governance and sustainability policies and initiatives are gaining ground in the developing world, and this trend should encourage companies to improve their disclosures and public accountability. Some of the most overlooked sustainable investment opportunities in emerging markets lie with companies making incremental improvements on these factors.”

Outlook for emerging markets

“Chetan concluded: “It is an interesting time to be looking at the emerging world today. We believe that the breadth of opportunity, growth, innovation, sustainability of business models and the much stronger institutional resilience compared to decades past when considered together create an attractive future for emerging markets. Emerging markets also continue to make strides towards climate goals and with the cost of renewable energy expected to fall in 2023, we might well see them make further climate investments.”

-ENDS-

Contacts:

Kira Foschi Franklin Templeton, Cannon Place, 78 Cannon Street, London, EC4N 6HL, Tel: 0207 073 8608 Email: [email protected]

Kathryn Cleaver / Olivia Nelson Teamspirit Tel: +44 7384 907518 / +44 07392 106925 Email: [email protected]

Notes to Editors:

1. TEMIT is a closed-end investment trust with approximately £1.94 billion of assets under management (as of April 30, 2023) managed by Franklin Templeton. It is listed on the London Stock Exchange (TEM).  The price of shares in TEMIT and income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not an indicator, nor a guarantee of future performance. Currency fluctuations will affect the value of overseas investments. When investing in a fund denominated in a currency other than sterling, performance may also be affected by currency fluctuations. In emerging markets, the risks can be greater than in developed markets. Please consult your professional adviser before deciding to invest.

This press release is intended to be of general interest only, and does not constitute professional advice. Franklin Templeton and its management groups have exercised professional care and diligence in the collection and processing of the information in this press release. Franklin Templeton makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton shall not be liable to any user of this report or to any other person or entity for the inaccuracy of information contained in this press release or for any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission.

Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes.

Issued by Franklin Templeton Investment Management Limited, (FTIML). FTIML is authorised and regulated in the United Kingdom by the Financial Conduct Authority.

For more information on TEMIT please visit our website www.temit.co.uk.

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