A squeeze on corporate profits has many investors nervously eyeing this year’s earning seasons, with talk of an earnings recession commanding headlines.

But diligent money managers who keep a firm eye on revenue visibility and a focus on company-specific growth drivers will withstand the slowing of global economic growth.

“Growth is certainly becoming more scarce,” says Brent Puff, senior portfolio manager of the Zurich Investments Global Growth Share Fund and Concentrated Global Growth Fund.

“As such the opportunity set shrinks a bit, but there are many companies serving markets with very favourable growth dynamics. We think they can and will be successful even if economic activity decelerates,” Puff says.

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Globally, the picture is uncertain; markets are looking for stabilisation in China, trade tensions still simmer across borders, a potentially chaotic Brexit and lower commodity prices are set to keep volatility higher for a good while yet.

The impact of the United States tax reform is fully digested and the economic cycle is heading into its late stages. As such, whether price hikes can be passed on are likely to differ on a company-by-company basis.

But the investment team at Zurich Investments Global Growth has scouted for ideas across the world and have come up with some investment opportunities they expect will resist the uncertain and overwhelming forces dominating headlines.


One such investment idea revolves around credit penetration in emerging markets.

Credit penetration refers to the number of private lenders offering loans to a population, whether they be secured loans for things like houses and cars, or unsecured loans, like credit cards and personal loans.

The by-product of low penetration – where it’s difficult for people to get lines of credit – tends to be sustainably high volumes in the banking system. That, coupled with a relatively consolidated market structure, results in less competition, high returns and some fine opportunities in the banking sectors.

“In those low credit penetration circumstances, we’ve found you can find some pretty attractive banks in emerging markets,” Puff says. “We think those dynamics are in play in many emerging markets and as such, we own several,” he says.

Indonesia is one such market where there is low credit penetration and a high growth industry structure. Peru is another, as is Mexico, though Puff points out the change in political leadership has potential to put pressure on banking fees across the system.