How US policy could benefit emerging markets

Arguably the biggest reason for the pullback in emerging market equities is owing to the trade spat between the US and China. However, we think that the market reaction has been excessive.

While it’s certainly hard to predict how things could play out, in light of the recent G20 meeting and talks between US President Donald Trump and his Chinese counterpart Xi Jinping, there seems to be a sense that there could be further negotiations and a more conciliatory tone going forward.

A trade war truce over steak and Malbec

Over steak, crispy chocolate and a 2014 Nicolás Catena Zapata Malbec, President Donald Trump and his Chinese counterpart Xi Jinping agreed to stand down from their impending trade war and direct their officials to focus on resolving bilateral trade problems.

Overlook emerging market volatility and see the opportunities

Emerging markets have continued to struggle in the second half of 2018 amid an environment of heightened global equity-market volatility and geopolitical and policy risks.

However, Chetan Sehgal, lead portfolio manager of Templeton Emerging Markets Investment Trust, believes that the pullback presents long-term investors with opportunities amid what he believes is a market overreaction.

Emerging markets: is the worst of the storm over?

Despite the predictions of a synchronised global upswing in 2018, so-called “growth markets” have provided investors with anything but this year. The MSCI Emerging Markets index peaked in January, but has since  continued to edge downwards. It reached its lowest point at the end of October, a decline of around 27% from its yearly high.

Chinese bonds could help protect your portfolio

Investing in emerging markets is often considered to be risky. This perception may apply particularly to China, which many people consider to be a volatile and unfamiliar investment environment.

However, most of China’s investment markets have been closed to foreign investors until recently, and some of the beneficial aspects of including China in your global allocation may not be well known.

Tactical Asset Allocator: a contrarian bull in the China shop

The big news this month has been the climb in US 10-year Treasury bond yields to 3.2%, their highest level since July 2011. Bond yields had been rising gently (and their prices falling), reflecting confidence that the US economy was robust enough to weather trade wars and other setbacks. However, the rise has spooked markets, forcing a reassessment of risk-free assets compared with equities.

With global markets in turmoil, Chinese shares offer potential

After a substantial run-up in 2017, China’s stock markets have experienced notable volatility in recent quarters.

The MSCI China Index was down roughly -9 per cent year-to-date (measured in US dollars) as of 30 September, while China’s mainland domestic A-shares were down nearly -20 per cent (measured in US dollars) for the same period.

Trump’s trade war: the view from Washington DC

Trade was the word on everyone’s lips during my recent trip to Washington DC and the mood there was grim. The US and China trade war is going to get worse before it gets better and our assumption is that all Chinese imports will be subject to tariffs sooner or later.

Emerging market funds saw a wide divergence in performance in September

It’s been a torrid few months for emerging markets. An escalating trade war, a strong dollar and fears of contagions spreading from Turkey and Argentina has knocked the region. Investment funds, however, have seen a wide divergence in performance, showing a split within the diverse asset class.

Eastern Europe and Latin America (Argentina’s persistent problems notwithstanding) performed well in September, with funds in both countries topping the tables for performance across all sectors.