Compelling Opportunities in Emerging Markets

Compelling Opportunities in Emerging Market

Emerging Market (EM) equities present a significant catch-up opportunity in 2022. This is based on six pillars: (1) improving vaccination rates and reopening, (2) an attractive interest rate differential vs. developed markets, providing support for currencies, (3) a powerful US demand story, (4) stable commodity prices, (5) under positioning vs. benchmarks, and (6) significant valuation discounts vs. DM.

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.