You know there’s an underlying problem when investment firms start to cut exposure to a particular asset class. Goldman Sachs’ decision last week to slash exposure to emerging markets is an indication of the current situation for these economies. The bank’s asset management arm said that it had scaled back its “overweight” exposure to emerging market currencies and debt amid rising trade tensions between the US and China. Emerging markets are bearing the brunt of an escalating trade war between the world’s two largest economies, and there is no way to be certain when this will end. Last week was the worst for emerging market currencies since the Turkish lira crisis last summer. The Chinese yuan has lost nearly three per cent of its value against the US dollar since 5 May – the day that President Donald Trump tweeted about new tariffs on the country. This rout seems to be spreading to other countries, with MSCI’s index of emerging market … [Read more...] about Are emerging markets ready to fight back?
Global emerging market fund
LONDON (Reuters) - After plowing billions into emerging market equities since October, investors have started to show signs of hesitation, but an uptick in earnings expectations should reassure those hoping to capitalize on stronger economic growth in the emerging world. FILE PHOTO: A man is seen in front of an electronic board showing stock information on the first day of trading in the Year of the Pig, following the Chinese Lunar New Year holiday, at a brokerage house in Hangzhou, Zhejiang province, China February 11, 2019. REUTERS/Stringer Emerging equity funds have suffered outflows over the past three weeks, according to EPFR data, and investors in a recent Bank of America Merrill Lynch survey described emerging markets as the “most crowded trade”. Year-to-date net fund flows into emerging markets total $15.7 billion, against $61.8 billion exiting developed markets, and global asset allocators have been increasing their exposure, betting that the worst is … [Read more...] about ‘No-one is breaking out the champagne’: emerging markets investors…
NEW YORK (Reuters) - After emerging market stocks led global equity markets lower in a brutal 2018, some U.S.-based fund managers are betting that the asset class may have the largest rebound in the new year. Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 28, 2018. REUTERS/Jeenah Moon/File Photo It may not look likely at the moment, given that an economic downturn in China prompted iPhone-maker Apple Inc (AAPL.O) to lower its quarterly revenue forecast on Wednesday for the first time in a decade. Its shares slumped nearly 10 percent after Chief Executive Tim Cook blamed the U.S.-China trade war and “economic deceleration,” prompting broad selloffs around the world the following day. Yet fund managers from Westwood Holdings Group, GMO, T. Rowe Price and Causeway Capital Management are among those who are betting that emerging market stocks will post outsized gains in 2019. They cite a combination of compelling valuations … [Read more...] about Fund managers hoping for stock rally look to emerging markets
NEW YORK (Reuters) - The steep decline in emerging market stocks since early this year are attracting some U.S. fund managers who think they may find long-term bargains amid the sell-off. FILE PHOTO: The JP Morgan Beijing office sign is pictured in Beijing, China, December 13, 2010. REUTERS/Jason Lee/File Photo Portfolio managers from Harding Loevner, Federated Investors, and Wells Fargo are among those who have been adding emerging markets stocks to their portfolios in the face of the imposition of import tariffs by President Trump and rising interest rates in the U.S. Emerging market asset prices have been hit hard this year. The MSCI index of emerging market stocks .MSCIEF closed Friday at its lowest since May 2017 and it is down about 21 percent from January’s high. An MSCI index of emerging market currencies .MIEM00000CUS is down 8 percent from its 2018 high, hit in March. On Thursday, JPMorgan cut its rating on Chinese equities, the largest weight on the … [Read more...] about Emerging market stocks’ descent to 17 month lows entices U.S….
“Emerging market (EM) equities has a history of headlines — mostly negative — and volatility,” said Devan Kaloo, Head of Global Emerging Markets Equities at Aberdeen Asset Management. Yet there is reason for optimism, Kaloo assured attendees of the 70th CFA Institute Annual Conference, especially for those value investors who dive deeply into the fundamentals, which may be turning positive. One primary reason for greater volatility in EM equities is less liquidity. Free float on the average EM company is only 30% whereas it is closer to 70% for companies in developed markets. “If you have a dollar to buy Exxon at 100% float, it has a different effect than buying a dollar of PetroChina with its 25% float,” said Kaloo. This fact can move markets. The balance of ownership is either majority family-owned or state-owned, so Kaloo recommended investing in EM companies with values that align with yours. “Understand the quality of the people behind the … [Read more...] about Emerging market equities: unloved and under-owned