Emerging market stocks are feeling the love again.
Investors who have led the summer stampede out of EM equities are slowly making their way back into once-battered markets like India, Indonesia and South Africa – lured by cheaper asset prices, the delay in Fed tapering and signs of improving EM growth fundamentals.
The MSCI Emerging Markets Index, having plunged by as much as 16.7 per cent between the first week of May and the end of June, has recovered nearly all its losses from this summer. Continue reading »
Emerging market stock is cheap these days. According to cyclically adjusted price to earnings (Cape) valuations favoured by the recently laurelled Robert Shiller, EM equities look like a bargain in historic terms.
At the end of August, EM stock had a Cape ratio of under 17, compared to a long-term average of about 26.
This takes no account of the differences between emerging economies, of course, but it is at least interesting. Valuations are nearing those of dirt-cheap European stock, which has a Cape ratio of under 15, compared with a long-term average of about 21. Continue reading »
EM investors appear to be polarising, between those who think the sell-off since May is a mere taster of the great unwinding still to come, and those who think it is a buying opportunity. Richard Titherington, chief investment officer for emerging market equities at JPMorgan Asset Management, is among the latter. He has made this call before and, so far, he has been right. Continue reading »
By Tassos Stassopoulos of AllianceBernstein
Where can you find a car market which will double in size in the next five years? Brazil and Russia might be obvious places to look, but would you have expected Chile, Colombia, the Ukraine and Vietnam? Picking the next big themes in emerging consumer markets is even harder than in the well-researched developed world. To get a better handle, we think, requires a triangular approach. Continue reading »
If you still think that markets move in cycles, this could be a good time to buy emerging market equities.
So says Richard Titherington, Chief Investment Officer for emerging market equities at JPMorgan Asset Management. You may lose money in the next three months, as the turmoil in the market works itself out. But on a one-to-three-year view, emerging market shares look good value. Continue reading »
One day Brazilian stocks are going to get cheap enough to lure the bargain hunters back in en masse. Alas Tuesday was not to be the day.
The Bovespa index suffered its steepest one day drop in nearly two years – closing down 4.2 per cent at 45,228.95, its lowest level since April 2009. This takes the bourse’s losses this year to 25.8 per cent, making it the worst performer among the the major markets. Continue reading »
From stocks to bonds to currencies, whichever way you cut it, it’s been a quarter to forget for emerging markets. Having soared to new heights at the start of the year as money gushed in, the asset class suffered a rude awakening in June after the US Federal Reserve announced that it could soon start scaling back its massive bond programme. Here’s a review of the quarter in a couple of charts. Continue reading »
With the MSCI EM index dead flat at the time of writing on Monday, it’s fair to say that a bit of stability has returned to the market.
So, with the index down 13 per cent this year, is it a time to buy? Not necessarily, says Dan Morris, global market strategist at JPMorgan Asset Management: China and other big markets are down for a reason, while sorting the wheat from the chaff in the rest of the big barn of EM equities is as hard as ever. Continue reading »
Emerging market assets suffered another bout of sell-off on Wednesday after the US Federal Reserve said it could start reducing the pace of its bond buying programme this year and end it altogether around the middle of next year.
The MSCI Emerging Markets Index fell 1.3 per cent to close at its lowest level since last September. Continue reading »
It’s often wishful thinking, but there comes a point in a mass sell-off when investors decide enough is enough. And so it was on Wednesday, with a near-1 per cent bounce in the Indian rupee against the US dollar, after weeks in which it had been in the forefront of a global plunge in emerging markets. Continue reading »
Emerging markets have kept global investment banks pretty busy over the last couple of years.
The boom – first in mergers and acquisitions and stock market listings and more recently in debt issuance from EM companies and sovereigns – has provided plenty of top-line growth for western banks, as they sought to rebuild in the wake of the global financial crisis.
But can the good times keep on rolling? Continue reading »
Rising US interest rates along with a China hard landing have long been cited as two of the biggest risks to emerging markets assets.
So how did the markets react to the relatively hawkish comments made on Wednesday by Ben Bernanke, chairman of the Federal Reserve, and the sluggish manufacturing data that came out of China on Thursday?
Pretty much with a shrug. Continue reading »
The underperformance of Bric equities is becoming an embarrassment for investors who are long – and for analysts who have been promoting the stocks. Not only have Bric shares lagged behind the developed world, they have been outpaced by small emerging markets, from Peru to the Philippines.
But one Bric bull who is sticking to his guns is Jonathan Anderson of Emerging Advisors Group. He says that it’s only a matter of time before Bric equities recover – and some of the headline-making small EMs come under pressure. Continue reading »
Emerging stocks are heading for their biggest first-quarter drop since 2008, weighed down by slowing economic growth, worries about profits, concerns about the Chinese property market and the general unease about the euro crisis.
With some EM currencies also suffering as the US dollar has surged ahead since the start of the year, it hasn’t been a great three months for fixed income either. Continue reading »