Compelling Opportunities in Emerging Markets
Emerging market equities corrected in 2018 and decoupled from US equities due to trade disputes, rising interest rates, a stronger US dollar, and rising political risks. With these factors behind us, a potential US and China trade resolution on the table, and a consensus view for an end to the US Federal Reserve’s rate hiking cycle, we believe EM equities are attractive on an absolute and a risk-reward basis.
We continue to be positive on the asset class and believe that the rare combination of compelling valuations, higher growth potential, and attractive positioning will create opportunities for strong emerging markets growth. Looking ahead, we believe that emerging markets are positioned for a significant rebound in 2019.
Investment Considerations — There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including the potential of loss of principal.
Emerging Markets Risk — The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political, legal and economic structures in these country may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Similarly, investors are also subject to foreign securities risks including, but not limited to, the fact that foreign investments may be subject to different and in some circumstances less stringent regulatory and disclosure standards than U.S. investments.