emerging market equities may be good investments 2016
Last Updated : GMT 11:00:11
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

arabstoday
arabstoday

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*

emerging market equities may be good investments 2016 emerging market equities may be good investments 2016

 



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*

emerging market equities may be good investments 2016 emerging market equities may be good investments 2016

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Air China suspends flights to North Korea

GMT 10:39 2017 Thursday ,23 November

Air China suspends flights to North Korea
Arab Today, arab today Sophian Yussef reveals suitable decoration

GMT 02:56 2017 Thursday ,23 November

Sophian Yussef reveals suitable decoration
Arab Today, arab today Syria opposition meets in Riyadh

GMT 06:23 2017 Thursday ,23 November

Syria opposition meets in Riyadh
Arab Today, arab today 'Advanced' cyber attack targets Saudi Arabia

GMT 10:18 2017 Wednesday ,22 November

'Advanced' cyber attack targets Saudi Arabia
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today Srebrenica women cry tears of joy

GMT 08:03 2017 Thursday ,23 November

Srebrenica women cry tears of joy
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today 'Robo-taxis' hold promise, and perils

GMT 08:07 2017 Thursday ,23 November

'Robo-taxis' hold promise, and perils
Arab Today, arab today Honda recalls 800,000 minivans

GMT 11:43 2017 Wednesday ,22 November

Honda recalls 800,000 minivans
Arab Today, arab today Singer Jahda Wahba has unlimited ambitions

GMT 07:56 2017 Monday ,20 November

Singer Jahda Wahba has unlimited ambitions
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 09:23 2017 Saturday ,18 November

Fedra happy for “Between Two Worlds” success

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 17:52 2017 Sunday ,03 September

Etiquette expert underlines importance of gifts

GMT 10:43 2017 Wednesday ,22 November

Cigar-shaped asteroid came

GMT 09:45 2017 Tuesday ,21 November

Visit Jamaica for more than just sun

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
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