The emerging markets investment opportunity
Several fund managers and analysts are pointing out opportunities in emerging markets being missed by many investors
Donald Trump’s presidential victory sparked worries for emerging markets investors because he had pledged to protect American interests and renegotiate the terms of international trade.
A stronger dollar is generally regarded as bad for emerging market countries with large debts denominated in dollars. Nations such as Turkey, South Africa and some Latin American economies have low domestic savings and high external debt levels, making them more vulnerable to a further strengthening of the dollar, but the two biggest markets, China and India, are much less vulnerable, according to investment experts at fund management firm BlackRock.
Several catalysts are in favour of emerging markets, not least that stocks are trading at lower valuations versus developed markets peers. Stabilising commodity prices and fading US dollar strength would also be supportive, say economists at investment bank
Recent 2016 figures from UK based emerging markets fund manager Ashmore (ASHM) showed a big spike in outflows around Trump’s victory to around $700m. Were it not for those outflows, UBS analysts calculate Ashmore would have reported $1bn inflows in the last quarter of 2016.
Investors can play emerging markets through low-cost exchange-traded funds such as iShares Core MSCI EM (EIMI) as well as more traditional funds like JP Morgan India (JII). (SF)
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell Youinvest.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.