Marc Faber says he's bullish on Thailand and Indochina.

With global markets suffering across the board in January, the controversy over investing in emerging markets at the Inside ETFs 2016 conference on Tuesday was fairly subdued. Portfolio specialists are generally bearish — though there are trends that make these investments compelling, some point out.

“Currencies in emerging markets are falling off the table, the standard of living is dropping dramatically – as is the asset class overall,” said Richard Bernstein, CEO of Richard Bernstein Advisors. He would rather put money into U.S. consumer plays, which are benefiting – not suffering from – low commodity prices.

Dennis Gartman, a money manager and founder of The Garman Letter, said, “I stick with the definition I’ve heard – that emerging markets means you cannot emerge in an emergency … due to a lack of liquidity.”  

But Marc Faber – author of the Gloom, Boom & Doom Report – emphasizes looking at countries near Thailand, namely Cambodia, Vietnam and Myanmar, which are growing.

“I see emerging markets as an asset class, but you have to look at individual markets and economies,” he explained to a crowd of about 2,000 advisors and others at the industry event in Hollywood, Florida.

“Some did exceedingly well from the ‘09 low to the ’14 high. There was some consolidation in 2015. So be selective,” Faber said.

While this group has “grossly underperformed the U.S. since 2011,” it could outperform the U.S. in the next bull market “which you are really have to be an optimist to think that is coming anytime soon,” he adds. “But when it happens, emerging markets should outperform the U.S., where valuations are high.”

In addition, Marten Hoekstra, CEO of Emerging Global Advisors, suggests that low prices for this asset class are a positive for investors. “We would certain say that emerging markets are at least as good a value as everything else,” hev explained. “We do not make timing calls.”

If the economies of the emerging markets or the developed countries expand, then that is good for emerging market equities, says Hoekstra, who formerly led UBS Americas’ wealth unit. He also points out that China retail sales have been up year over year, but are down in the U.S.

“But are emerging market equities really cheap enough for U.S. investors?” asked Bernstein. “I say there’s little to no value, and they’re not good enough.”

Varied Situations

Faber returned the focus on individual countries. “Some emerging markets are very depressed, with large rebound potential, like Russia or Brazil. It’s probably too early [in Brazil], but maybe not too early for Russia,” he stated.

Again, he emphasized, “Some emerging markets are booming: Cambodia, Vietnam, Myanmar and Laos, as well as some firms in Thailand and the Indochina region, which are growing rapidly from a low GDP-per-capital base.”

This means consumers have been transitioning from bikes to motorcycles and on to cars, are buying life insurance, purchasing more beer and spirits, and obtaining consumer credit. “Loan sharks are doing a good business in Asia,” he quipped, adding that currently gambling stocks are very depressed.

Tourism is booming in the region, particularly in China, Faber points out, with some 120 million Chinese going overseas in 2010 vs. 1 million in the 1990s.

“Dollar investors in the emerging markets are down 15%, but most of that is due to currency changes,” said Hoekstra. “Consider that debt there is growing, but not as percentage of GDP, you want debt for GDP expansion.”

But Bernstein remains unconvinced. “There is massive overcapacity worldwide. In China, they are doing cartwheels. They’ve got to keep the hope of growth alive. They cannot risk instability,” he explained.

In Argentina, though, Garman says there is a new administration led by President Mauricio Macri and lots of change on the horizon.

“It this process, the country is going to fix itself,” said Hoekstra.

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