China’s slowdown appears more cyclical than structural according to Klaus Bockstaller (pictured), Head of Emerging Markets at Pictet Asset Management, and has consequently been a key factor in driving better emerging market returns. Bockstaller believes inflation will continue to fall, allowing China to ease its monetary policy although Bockstaller thinks this will be gradual in light of the country’s previous period of excessive credit expansion. “Our view is that activity will slow further during the first half of 2012, which could lead to further weakness in the property sector,” said Bockstaller, adding “we remain confident that China will deal with near-term cyclical pressures without triggering a deeper downturn.” Earnings forecasts for emerging markets in 2012 are around 10 per cent. Markets that represent good value in terms of price/earnings and price/book ratios are Russia and India according to Bockstaller. “Having been underweight in India for some time, and with the country’s leading indicators improving, we are moving back to a neutral position, largely through increasing our exposure to the banking sector,” explained Bockstaller.