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NEW YORK, May 5 (Reuters) - Major investors on Monday said they see opportunities in Brazil and Russia, two beaten-down emerging markets, but remain cautious on China, underscoring wariness around emerging markets once considered global darlings.
Even the optimism was replete with caveats at the Sohn Investment Conference, where investors present some of their best ideas in order to raise money to fight pediatric cancer.
Michael Novogratz, a principal at Fortress Investment Group, said he sees upside for Brazilian assets -- as long as President Dilma Rousseff loses her bid for re-election later this year.
Should Rousseff win, he said, Brazil "is in for a long dark period."
The race for Brazil's October presidential election has tightened, according to a poll released on Saturday, which also showed high disapproval for Rousseff and widespread dissatisfaction with the stagnant economy.
Brazil jumped out of recession in 2009 and the economy shot forward in 2010. Since then growth has stalled. The benchmark Bovespa stock index fell more than 15 percent in 2013. So far this year, the index is up about 4 percent.
"Brazil had this wonderful windfall," Novogratz said. "The Brazilians squandered that surplus."
But with Rousseff's two main rivals - the more centrist Senator Aecio Neves and former governor Eduardo Campos - possibly more market friendly, "local markets would jump all over" a change in policy.
In Russia, assets have tumbled recently as tensions in Ukraine have fanned fears of war in the region. Russian stocks are off around 14 percent year to date.
The decline has helped make Russian state-controlled gas producer Gazprom more attractive, said James Grant, a financial journalist, author and historian.
Gazprom shares have fallen about 9 percent this year, after having dropped for the past three years.
"Its many imperfections would surely seem to be priced in," Grant said, citing what he said is an "A-OK" balance sheet.
Gazprom supplies about 30 percent of the gas consumed in Europe, shipping about half of that via Ukraine.
"Good things do happen to cheap stocks," Grant added.
Though China has not experienced the same kind of tumble, some think that is merely a matter of time.
Chris Shumway, the founder and managing partner of Shumway Capital, was blunt: "Short the CNH," he said, referring to the offshore yuan.
He said the issue in China is simple: excess credit growth over nominal GDP, saying, "That's not sustainable."
The government will have limited options to deal with a slowdown and the simplest might be to opt for a cheaper yuan, Shumway said.
The Chinese government is trying to restructure the economy so it is driven more by consumption than the traditional engines of exports and investment, but wants to avoid a sharp slowdown that could fuel job losses and threaten social stability. (Reporting by Sam Forgione, Rodrigo Campos, Svea Herbst-Bayliss and Luciana Lopez; Editing by Leslie Adler)