HSBC Asset Management predicts overall strong investment returns from Brazil, Russia, India and China this year despite anticipating continued volatility.

Despite robust economic growth, investors pulled money out of the BRIC bloc last year as part of wider risk-aversion. Although the investment outlook has turned dire after a positive first quarter, the UK asset manager thinks the BRIC markets, made up of the world’s four largest emerging economies, can play an important role for investors in 2012.

“Not only are valuations in these global emerging markets looking attractive relative to historical standards where emerging markets are trading at a 25 per cent discount to their long-term average, but we continue to see solid fundamentals and robust economic activity in these economies,” said Philip Poole, global head of macro and investment strategy at HSBC Global Asset Management.

“In addition, inflation, which had been of major concern last year, has shown signs of moderation,” Poole said.

HSBC is particularly keen to invest in Russia, which is the firm’s largest overweight position and offers low valuations and high levels of profitability in its key sectors: energy, materials and financials.

The asset manager thinks the Chinese authorities have managed to engineer a soft landing and singles out financials and especially insurance firms, where returns are overall high compared to the rest of the world.

HSBC has also identified value-for-money stocks in India, where the primary economic driver is rising consumer spending.

Brazilian stocks are more expensive than their fellow BRICs, but HSBC has been closing its underweight position on the back of falling inflation, consumption and profitable banks.