You dont read so much about the emerging markets story these days. With China slowing, Russia in auto-destruct mode and Brazil all but forgotten, only India is grabbing the headlines in a positive way.
The investor trend for piling into FTSE 100 stocks primarily on their exposure to emerging markets has abated as a result.
The mixed performance of China-focused banks HSBC Holdings and Standard Chartered , and major miners BHP Billiton and Rio Tinto havent helped. Nor have patchy results from Diageo.
But now there is some good news from emerging markets. Unilever (LSE: ULVR) (NYSE: UL.US) is the beneficiary, and its success spells more good news for Burberry (LSE: BRBY).
Hope Emerges
Unilever has just posted a healthy 5.4% first-quarter sales growth in emerging markets, against 2.8% across the group as a whole.
Emerging markets are now Unilevers prime growth engine, with sales dropping 0.7% in developed markets. Without itsglobal exposure, markets wouldbe taking a far dimmer view of the stock.
Emerging market growth may be slowing but the consumer boom continues to gather pace, as consumers load up their shopping trolleys with Western-branded foods, household goods and health and beauty items.
Trade Winds
Emerging markets arent a monolithic entity, though. Unilever did suffer setbacks in Brazil and Russia, but China remainedstable, despite bubblefears.
Unileversresults were alsodrivenby fair currency winds. The 12.3% rise in first-quarter sales to 12.8bn included a 10.6% currency boost, because Unilever reports in the declining euro.
The end of double-digit emerging market GDP growth will no doubt temper its prospects, but the outlook still looks far more exciting than in the ageing, indebted, slowing West.
Asian Angst
Luxury goods maker Burberrys second-half trading update saw a healthy 9% rise in group sales to 1.4bn, with double-digit growth in all regions.
In contrast to Unilever, Asia-Pacific was a problem, with sales downin Hong Kong as pro-democracy protests made getting to its stores difficult, and visitors from mainland China began spending more cautiously. The Chinese government crackdown on excess has also had an impact.
The Story Continues
Like Unilever, Burberry has benefited from its global diversification strategy, with sales in developed markets holding strong, helped by flagship store openings in Los Angeles and Japan. Currency headwinds eased as sterlings recent recovery flattened out, helped by weakness against the dollar.
Burberrys emerging market setback looks temporary to me. Unless there is a shock, emerging market appetite for luxury seems likely to remain strong.
Unilevers success in this region suggest that the emerging markets story is far from over, but has further to run for both stocks.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. The Motley Fool UK owns shares Unilever. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
