Four of HSBC's top asset management executives yesterday painted a relatively rosy picture for emerging markets in the coming year at a press briefing in Hong Kong. That may not come as a huge surprise, given the relatively large exposure HSBC Global Asset Management has to those markets -- a hefty $70 billion of its total global AUM of $416 billion.

Their broad outlook largely chimed with many analysts' forecasts: emerging markets are in better shape than developed markets due to lower debt and better economic prospects; global growth will continue next year, led by emerging markets, albeit with corrections along the way; and inflationary pressure is unlikely to be a threat for a year or two, although emerging countries have greater concerns on this front.

The quartet also expressed some less widely supported opinions. For example, Nick Timberlake, London-based global head of emerging markets at HSBC Global Asset Management, agrees with the general consensus that China will remain a strong driver of growth. But he argues there are better opportunities to be had by investing in assets outside China that have exposure to the country.

Timberlake cites South Korea as one example of a market with substantial exposure, through its industrial sector, both to China and to the Middle East; and it's one of the cheapest emerging markets at present. There are, nevertheless, some attractive investments in China, he says, such as coal companies, which can benefit from both demand and supply factors within and outside the country.

As for a broader emerging-markets forecast, Timberlake notes that HSBC's growth forecasts are significantly higher than those of the International Monetary Fund. "We feel the IMF forecast will need further upwards revision, and it's a similar story as far as individual companies are concerned," he says. Emerging-market countries still have a good deal of capacity to further stimulate their economies, if necessary, he adds.

On the interest rate front, "dramatic" rises are unlikely in emerging markets in 2010, says Timberlake. Emerging and developed markets were very synchronised in the loosening phase post-crisis, but will be much more "de-synchronised" in the tightening phase, he says. He expects further cuts in Russia, for example, rather than rises. And emerging-market governments in general will probably wait to act until they see what developed markets decide to do.

Leon Goldfeld, Asia chief investment officer at HSBC Global Asset Management, makes the point that while confidence is on the up, post-crisis recoveries are on average much slower and shallower than recoveries from cyclically induced recessions. He cites IMF data to support this.

Going on to discuss the question of renminbi strength, Goldfeld notes that the People's Bank of China (PBOC) had allowed the currency to appreciate against the dollar from 2005 to 2007 by between 5% and 7% a year. The central bank put a stop to that policy in 2007, but he says it will resume this year; perhaps not as strongly as in 2005 to 2007, but the renminbi will start to strengthen over the next few years.

The Chinese government is also set to pick up on other policies that were delayed by the financial crisis; on Friday the China Securities Regulatory Commission approved in principle the launch of stock market index futures. It also said it would allow short selling and margin trading of stocks, hedging tools long-awaited by investors.

Such reforms are part of the evolution of the market, says Ayaz Ebrahim, Asia chief executive at HSBC subsidiary Halbis Capital Management in Hong Kong. "It's a step in the right direction," he adds, "and will allow for increasing participation in the A-share market, and increased volumes. Ebrahim adds that the impact on the H-share market won't be significant.

Finally, George Varino, New York-based managing director and product manager at Halbis, highlights appealing opportunities in local emerging-market debt, due to carry and reduced volatility. Meanwhile, inflation-linked bonds are increasingly attractive due to rising breakeven inflation rates, he adds.