With the changing political landscape and currency changes occurring, emerging markets are gearing up to be the smart investment.
During the dinner between the U.S. and Chinese leaders, a temporary truce occurred that is giving emerging markets much-needed relief. Both leaders agreed to a 90-day tariff trade freeze that would alleviate the trade war. Both nations are optimistic about negotiating a longer lasting agreement within the foreseeable future.
With the recent agreement, MSCI’s index increased by more than 2% and 2.4% in China and Hong Kong, respectively. This has been the most significant one-day gain in China in the last month. The increase occurred in multiple markets with Johannesburg increasing 3.7%, and both Turkey and Russia increasing over 1%.
The sudden increase has been the highest the index has seen in over four months, and it is only going to get better with recent news from the Federal Reserve that they would stop increasing rates.
Morgan Stanley believes that the MSCI emerging market index will increase by 8% by December of next year. The US market is going to slow down while emerging markets will steadily grow.
Morgan Stanley favors India, Brazil, and Peru as investment opportunities, compared to Mexico and Greece that are considered to be unfavorable.
Another reason to favor India comes from the fact that the rupee has had its best month since 2012. The country is holding a policy-setting meeting later this week and should tell investors whether the country is going to change their rate.
Emerging markets are currently at an ideal price point to purchase. Ashmore Group Plc, which is known to specialize dealing with emerging market assets, saw gains within the last week. The company manages over $76 billion dollars and has had eight days of consecutive gains, the longest they have seen since earlier last year.
Investors can also look toward India, who is favored by both Ashmore Group Plc and by Mark Mobius from Mobius Capital Partners.
Interested investors should start to look into investing for promising emerging markets such as Malaysia. The country currently has an account-surplus and a stable economic outlook. This is all thanks to its steady market and growth outlook.
According to Nicholas Mapa, an economist with ING Groep NV, investors should start looking toward how the drop in oil and Middle East’s issues are going to impact emerging markets next.