Skip to main content

STAN HONDA/Stan Honda/AFP/Getty Images

Many strategists love the idea of investing in companies that have a high exposure to emerging economies, such as China and India. But here's a twist: UBS strategist Oliver Dettmann recommends investing in emerging economies that have a high exposure to the United States. In particular, he likes South Korea, Taiwan and Mexico.

Korea and Taiwan, which are far more developed than many of their emerging market peers, have strong industrial and technology sectors that link them closely to the U.S. economic recovery.

"Both markets are attractively valued," he said in a note. "Taiwan is trading at a price-to-earnings ratio of 13, based on 12-month forward earnings estimates, whereas Korea is trading at just 10 times forward earnings. We expect both markets to outperform due to favorable export dynamics and re-rating potential on the back of low valuation."

Story continues below advertisement

Meanwhile, Mexico is home to a number of highly cyclical companies, particularly in manufacturing, that also give it exposure to the U.S. economy. With the low valuation of Mexican stocks, Mr. Dettmann now recommends Mexico as the "preferred" market in Latin America, while Brazil gets downgraded to "neutral" due to expected interest rate hikes there.

Report an error Editorial code of conduct Licensing Options
As of December 20, 2017, we have temporarily removed commenting from our articles. We hope to have this resolved by the end of January 2018. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to