Recently the World Bank has raised its forecast for China’s GDP growth to 10%. Final consumption demand is playing an increased role in driving growth. In China, for instance, high levels of job creation and rising wages are resulting in rapid growth in private consumption. Various countries are monitoring the risk of overheating of their economies. This comforts our view that emerging markets are behaving sensibly and are conducting sound monetary policy. Finally, valuations are not stretched yet, especially in the light of attractive growth prospects, sporting an aggregate PE ratio of about 12 for 2011. In the light of this, we recommend investing in a broadly diversified fund across all sectors and regions. In addition to investing in the well-known markets of China, India, Brazil and Russia, we invest in the promising countries of South-Korea, Mexico, Malaysia and Taiwan.
Our Sustainable Emerging Markets strategy allows investors to participate in the growth of and the exciting prospects for Emerging Markets, confident that sustainable criteria are taking into account. In order to select sustainable and responsible emerging markets’ companies, we have developed a structured sustainability analysis.
The strategy invests in companies that:
- Are well exposed to the Global Sustainability Trends, which have significant influence on economies, people, the environment and society (Demographic evolution, Health & wellness, Climate change, Developing economies, Interconnectivity, Resource depletion).
- Respect the ten principles of the United Nation’s Global Compact which encompasses the four main areas of Human rights, Labour standard, Environment and Anti-corruption.
- Are not involved in controversial businesses and activities (Adult content, Alcohol, Gambling, Tobacco, Weapons and activities in Oppressive regimes).
The strategy is defined by an experienced team with on average more than 10 years of experience of investing in Emerging Markets. The rigorous selection of sustainable and responsible issuers is carried out by a team of dedicated SRI analysts.
Key points:
- Investing in emerging markets remains currently an investment opportunity.
- A company’s sustainability performance remains important in achieving as well as protecting long-term growth.
- One of the first sustainable strategies in Emerging Markets.
- Process integrating both an in-house sustainability and financial analysis.
- Experienced team investing in emerging markets and a dedicated SRI analysts team.
Performance
|
Dexia Equities L Sustainable Emerging Markets C
Since Inception |
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Return YTD C share (1) 25.00%
3Y Volatility C share (2) 27.62%
Morningstar (3): -
(1) Return YTD as at 30 December 2010, for class C, net of fees, in the fund currency.
(2) Volatility 3 years, calculated with monthly returns, except for funds with a history of less than 24 months (weekly returns).
(3) Morningstar Rating Overall, European open-ended fund database, as at 30 December 2010. |
| |
Focus on two companies part of our strategy
OCI
OCI Company Ltd. is a Korean chemical manufacturer. The Company manufactures basic, fine, coal, and petrochemicals, such as toluene di-isocyanate (TDI), soda ash, carboner, sodium bicarbonate, benzene, and polyvinyl alcohol (PVA). OCI also produces polyvinyl chloride (PVC) windows.
The company is well positioned towards global sustainability trends, especially regarding Climate change and Resource depletion, thanks to a diversification of its portfolio activities in renewable energies. Indeed, OCI is a world leading producer of high-purity polysilicon for the solar industry. The company has also purchased, the 18 January 2011, the Chicago-based renewable energy project developer CornerStone Power Development LLC, to boost sales in the growing North American renewable energy market. The company is also recognized to assure a healthy, safe and environmentally workplace to its employees (good safety track record, awards regarding safety…). OCI has the capacity to increase cost competitiveness and meet high demand and to preserve its leadership position in the polysilicon market. We expect the company reports strong quarterly profits, mainly on sales and polysilicon price increase. During 2010, the company had shown good performance + 51%, with a strong price recovery since end of the year.
COSAN INDUSTRIA
Cosan Industria is a Brazil-based company active in the fuel production and distribution. The company cultivates harvests and processes sugarcane, the main raw material used to produce sugar and ethanol. Through Cosan Combustíveis e Lubrificantes, licensed to use famous brands, Esso and Mobil, it has become the only totally integrated company in the sector.
The company shows positive and responsible behaviour towards global sustainability trends, in particular Climate change and Resource depletion, with its engagements in the production of clean and renewable energy (ethanol from sugarcane). The company has developed environmental actions to protect riparian forests, to promote conservation and recovery of vegetation in its agricultural areas or to preserve water resources. The company also used a variety of recycling processes in order to reuse by products produced by ethanol or sugar. Cosan has developed a Safety, Health and Environment System, to ensure the safety of the approximately 43,000 people working in the group, including training sessions, incident analysis and controls. The group has a good positioning and strategy in the sector. First, thanks to its verticalization of its sugar and ethanol operations through the acquisition of Esso’s asset, but also due to synergies to be created with the joint-venture between Cosan and Shell. The European Union has approved a sugar and ethanol joint venture, $12 billion, between Royal Dutch Shell Plc and Cosan SA Industria & Comercio, on the 4 January 2011. There are overall positive prospects for the company in terms of improvements in logistics. The company had a recovery in margins thanks to higher sales volume.