The Overall Emerging Market Landscape

Emerging markets are seeing the positive uptake that they were expected to reach this year. This last January, the Latin American markets saw their best January month in the previous 13 years. The market saw an increase of about 15 percent overall, while Brazile’s Bovespa rose by .4 percent, and both Mexico and Argentina’s stock increased .8 percent.

Latin American countries aren’t the only ones seeing the positive uptake. The year started out with the Dow Jones Industrial Average, S&P 500, and the Nasdaq faring worse against the MSCI China. The index rose more than 12 percent in January.

Investors that utilized the popular ETF opportunity iShares, MSCI Brazil saw a gain of 18% to their investment. Russia’s emerging market has seen similar improvements, with the VanEck Russia ETF seeing an increase of more than 12%.

Overall, the MSCI for Emerging markets has seen an increase of over 9%. Compared to the Dow and S&P 500 at 7 and 8.4 percent respectively, emerging markets are making a comeback.

The good turn of events stems from the fact that many believe the China-trade talks will end well for emerging markets. Because of the optimism, EMs were able to attain a record five-month high on Friday. The United States President stated that he would meet with the Chinese President to close up a deal.

Not only that, but the US Federal government did not increase their rates, which is good news for many currencies. In fact, the US dollar fell more than 1% compared to Turkey’s lira, Mexico’s peso, and Brazil’s real. If the rates stay consistent or low, emerging markets will look more appealing to investors. The global currency for debt is paid of using the US dollar. When the dollar rates are low emerging markets can pay for their debt more easily.
In a letter to clients, Saad Siddiqui of JPMorgan stated that the time is right for EMs to bounce back while the US Federal government has shifted its stance to a more dovish approach.

The next step would be to look at the market’s political landscape and how the country is faring. Based on those criteria, investors can make better decisions on where they should invest.

Even though they have gone up steadily within the last year, emerging market stocks can be bought relatively low still. Investors who are interested in moving forward with emerging markets should aim to get into it now.

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