Arab Today, arab today emerging market equities may be good investments 2016
Last Updated : GMT 03:14:05
Arab Today, arab today
Arab Today, arab today

Emerging market equities may be good investments 2016

Arab Today, arab today

Arab Today, arab today Emerging market equities may be good investments 2016

The Chinese economic slowdown
Hong Kong - Arab Today

Emerging market equities, which have had a torrid year because of China’s economic slowdown and expectations of a US interest rate rise, could present a good investment opportunity in the coming year because of attractive valuations and signs of economic improvement.

The end of quantitative easing by the US Federal Reserve, and its decision to raise interest rates in the middle of this month, contributed to negative investor sentiment on emerging markets this year. Emerging markets cumulatively have suffered their first year of net capital outflow since 1988, with the Institute of International Finance projecting a capital flight of US$541 billion.

The MSCI Emerging Market index has fallen 17 per cent during 2015, compared to the negative 3.5 per cent performance by the MSCI World Index.

At a time when investor expectations for emerging market corporate earnings are at their lowest ebb, we have raised our allocation to emerging market equities to “overweight”.

We believe the pessimism is excessive. Valuations for emerging market equities have become attractive, and are now trading at just over 12 times forward earnings, a third cheaper than the S&P 500.

And at the same time, economic conditions across the developing world are stabilising, and the stage is set for an end to the four-year decline in corporate earnings.

The Chinese economic slowdown had a knock-on impact on other Asian economies, and a recovery should have a wider positive effect.

We are already seeing signs of the long-awaited “rebalancing” of the world’s second-largest economy, with the Chinese consumer starting to pick up the slack from the traditional growth engines such as export manufacturing and property development. Higher wages, prompted by a shrinking workforce, is spurring consumption, with retail and car sales both growing in double digits in recent months.

The capital flight from emerging markets is in essence because of the unravelling of flows in the other direction, provoked by three rounds of US quantitative easing that began in 2008, which led investors to search for higher yielding investments in the developing world.

The argument goes that the Fed’s decision to raise interest rates for the first time in almost a decade will now mean a stronger dollar, continued low commodities prices, and Asian currency weakness. But because markets react far in advance, especially of such a well-signalled move, this scenario has already largely played out.

Furthermore, the curtain has certainly not fallen on the era of loose global monetary policy, with the Fed insisting it will tighten the monetary reins gently, and Europe and Japan likely to continue with their efforts to stimulate the economy.

Indeed, in addition to emerging markets, we are also positive on the outlook for European and Japanese equities next year, while US stocks could well underperform.

Our forecast is for another quarter of earnings declines in the US before a recovery. Even then, higher interest rates and slowing economic momentum are likely to make conditions more challenging for US companies to outperform their peers elsewhere in the developed world.

Euro zone and Japanese stocks are relatively inexpensive, many companies have seen their global competitiveness boosted by weaker currencies, and this advantage is likely to endure due to exceptionally supportive monetary policies.

On a valuation basis, European stocks are the most attractive of any developed markets at this point, both compared to bonds and on the basis of normalised corporate earnings. What is more, euro zone equities are trading at their lowest level to date relative to their US peers in US dollar terms.
Source: The National

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today emerging market equities may be good investments 2016 Arab Today, arab today emerging market equities may be good investments 2016

 



Arab Today, arab today
Arab Today, arab today Fadi explains secrets of  Nancy Ajram's newlook

GMT 18:23 2017 Friday ,24 February

Fadi explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Tourist guide explains types of tourism

GMT 18:28 2017 Saturday ,25 February

Tourist guide explains types of tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Zainab al-Maliki reveals herTV presenter models

GMT 18:12 2017 Friday ,24 February

Zainab al-Maliki reveals herTV presenter models

GMT 05:58 2017 Saturday ,25 February

US new home sales rise in January

GMT 05:46 2017 Saturday ,25 February

Record unemployment in Brazil

GMT 05:33 2017 Saturday ,25 February

Indian wind power tariffs fall

GMT 05:27 2017 Saturday ,25 February

German construction sector grows
View News in Arabic - Business: اقتصاد دولي
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Penguins in the age of dinos

GMT 11:44 2017 Saturday ,25 February

Penguins in the age of dinos
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today 'Constructive' Vauxhall talk with union

GMT 08:54 2017 Saturday ,25 February

'Constructive' Vauxhall talk with union
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Actress Lobna Abdel Aziz proud of her career

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 10:20 2017 Thursday ,23 February

Brazil's top diplomat resigns

GMT 11:54 2017 Thursday ,23 February

Saudis await visitors but will they come?

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday