Latest news with #iSharesMSCIEmergingMarketsETF
Yahoo
14-06-2025
- Business
- Yahoo
The Dollar Is Crumbling, And Hedge Fund Analyst Says A New Global Trade Is Brewing
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. As the U.S. dollar has slumped to its lowest level in over two years, emerging market stocks rallied in near-perfect inverse fashion—a trend that may be just at its early stages. The iShares MSCI Emerging Markets ETF (NYSE:EEM), which holds more than 800 EM stocks, posted its ninth consecutive daily gain—the longest streak since the fund's inception in 2016—reaching levels last seen before Russia's invasion of Ukraine. 'As an investor, I want to operate under the assumption that... the dollar is going to be devaluing," Otavio Costa, macro analyst at Crescat Capital, said in an exclusive interview with Benzinga. "You want to buy natural resources, you want to buy hard assets, but you also want to buy emerging markets in a big way,' he added. Trending: Let your money work smarter: . No hidden fees, no commitment. At the core of Costa's view is the widening gap in interest payments between the U.S. and its developed peers. The U.S. spends about 5% of its gross domestic product on interest—when combining federal and local levels—far exceeding developed peers like Germany, Japan, and Canada, where interest costs are about 1%. Because the U.S. has far less fiscal flexibility, Costa believes it will be forced to cut rates more aggressively than other economies. For Costa, the implication is clear: 'That's going to translate into interest rates differentials contracting and causing the dollar to fall."Costa emphasized the valuation gap between U.S. and emerging market equities. "The Cyclically Adjusted Price-to-Earnings (CAPE) ratio of the U.S. is about 35, one of the highest in history. You look at Brazil, and it's about 12." he said. "Why would you not deploy capital there?' Costa sees emerging markets, hard assets and undervalued foreign equities as the likely beneficiaries of this rotation. He sees particular value in Brazil, not just in equities but in fixed income as well. "In Brazil, the equity market looks attractive, the bond market looks very attractive," Costa said. Among developed markets, Costa is particularly bullish on Canada. He sees the Canadian dollar—historically linked to oil and natural gas—on the verge of a breakout, fueled by its commodity exposure and underweight positioning in global portfolios. "The Canadian dollar is a contrarian play that could benefit from U.S. weakness and commodity strength," he said, adding that Canadian mining companies could also enjoy capital inflows. He added that capital markets are already signaling a shift. "Argentina starts doing well all of a sudden after politics changes... India is doing quite well. Japanese equities doing better than the U.S. Now you're seeing European equities outperform U.S. equities." "These things are just starting to occur," he said. "They're big moves." Read Next: Level up your portfolio tracking with Snowball Analytics: see all your investments in one dashboard with real-time stock and dividend tracking for free today. Image created using artificial intelligence via Midjourney. This article The Dollar Is Crumbling, And Hedge Fund Analyst Says A New Global Trade Is Brewing originally appeared on Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
CNBC
19-05-2025
- Business
- CNBC
JPMorgan upgrades emerging markets. How to play the improved outlook
Emerging market stocks couldn't catch a break the past four years. Now their fortunes may be turning. JPMorgan upgraded emerging markets to overweight from neutral on Monday. Strategist Mislav Matejka cited several reasons for the change, including easing trade tensions and attractive valuations. "De-escalation on U.S.-China trade front reduces one significant headwind for EM equities," Matejka wrote. "Big picture, the [year-to-date] increase in tariffs is still extremely large in a long term context. … We remain concerned about the impact of tariffs on medium term growth in U.S. and elsewhere; however, last week's news is clearly positive, especially for China." China and the U.S. agreed last week to temporarily lower tariffs as part of an attempt to negotiate a broader trade agreement. The news sent the iShares MSCI Emerging Markets ETF (EEM) higher by 3% last week — its fifth weekly advance in six. The strategist also noted that emerging markets are trading at 12 times forward earnings "and at a bigger than typical discount to" developed markets. The EEM exchange-trade fund is up 10.6% so far in 2025, outperforming the S & P 500's meager 1.3% advance. That's also better than the European Stoxx 600's 7.6% gain. EEM's 2025 advance puts it on pace for its best year since 2020, when it rose 15.2%. This performance also marks a stark contrast from the previous four years, when the EEM lagged both the U.S. and Europe. Check out how the fund — along with the S & P 500 and Stoxx 600 — did between 2021 and 2024: Declines during that time for emerging markets were led in part by China, as the country's economy struggled to recover following strict Covid-related lockdowns. EEM also suffered after President Donald Trump last month announced steep tariffs on dozens of countries. The fund has since recovered, however. Matejka highlighted India and Brazil as potentially notable EM winners. The iShares MSCI India ETF (INDA) is up nearly 4% year to date. EWZ , its Brazilian counterpart, has soared 24%.
Forbes
22-03-2025
- Business
- Forbes
Should You Have Emerging Markets In Your Portfolio? How To Decide
Emerging markets have underperformed in recent years, but some analysts believe a resurgence is overdue. A report from RBC Capital Management notes some promising trends for these up-and-coming economies. China's dominance of the segment has lessened, emerging-market currencies have shown strength and the U.S. trade war likely won't involve some important emerging market economies—namely, India, Brazil and South Africa. Does this mean it's time to expand your portfolio beyond developed economies? Let's discuss the pros and cons of investing in emerging markets, how much you should allocate to the segment and three ways to fulfill that allocation. Emerging markets are economies in transition from developing to developed. They are economic adolescents: They show some characteristics of fully developed countries, but they remain less sophisticated than the U.S., U.K., Canada, Germany and others. Relative to developed nations, emerging economies demonstrate: Investment research firm MSCI includes 24 countries in its emerging markets index. Six of the top emerging markets are China, India, Brazil, South Korea, Taiwan and Mexico, according to Nasdaq Contributor Prableen Bajpai. The advantages of investing in emerging markets include higher growth potential, diversification benefits and attractive valuations. Emerging markets can grow quickly. You can see the growth potential informally by reviewing the history of iShares MSCI Emerging Markets ETF (EEM), which tracks the MSCI Emerging Markets index. The ETF grew 338% from April 2003 to December 2007, which averages about 96% annually. In the past five years, the fund has appreciated 8.4% annually on average and is up 11.2% over the last 12 months. To be clear, these growth periods have not been smooth and easy. The iShares ETF has demonstrated dips as extreme as its gains. Even so, the emerging markets fund outperformed the S&P 500 between early 2003 and 2010. Since then, the S&P 500 has pulled ahead. Diversification is a strategy for managing risk and volatility. By investing across sectors, company sizes, asset types and geographies, you incorporate varying behaviors into your portfolio. Ideally, these varying behaviors have a mild offsetting effect when economic or financial market conditions change. Instead of watching all your positions lose value simultaneously, you might see some rise while others fall. The net effect is less extreme behavior for your portfolio as a whole. Emerging markets contribute to this strategy. For example, Brazilian or Chinese equities may experience gains related to local conditions that wouldn't benefit, say, Apple or Microsoft. Or, your domestic stocks may react more negatively to a U.S. economic recession than your emerging markets holdings. Emerging market stocks can be better values than domestic stocks. The P/E ratio of the iShares MSCI Emerging Markets ETF portfolio is 15.63. The fund's P/B ratio is 1.97. Both metrics are modest relative to the S&P 500, which has a P/E of 28.39 and a P/B ratio of 4.87. Emerging market stocks tend to be volatile, partly because they are subject to currency risk and political risk. With greater growth potential comes greater volatility. Emerging market stocks can fall as quickly as they can rise. For example, the iShares fund and the MSCI Emerging Markets Index lost half their value in the wake of the 2008 global financial crisis. They also dipped more than 35% between mid-2021 and late-2022. If the local currency loses value relative to the U.S. dollar, it can offset returns or magnify losses. Currency risk can worsen the normal volatility of emerging markets stocks. Purdue University's Craig Brown notes that the current trade policy uncertainty will likely increase currency volatility globally. Global U.S. companies like McDonald's and Amazon also face currency risk. However, these companies generate a lot of revenue in the U.S., which limits the relative currency effects. War, changing monetary policy and fluid regulations are political risk factors present in emerging market economies. These dynamics can destabilize the business environment, reduce earnings and shrink investment returns. Emerging markets assets are too volatile to be core holdings, no matter how risk-tolerant you are. Their ideal role is a complementary one. Alongside more stable assets, emerging market securities can add upside and improve portfolio diversification. Many investors limit their emerging markets exposure to a single-digit allocation. Here are some allocation data points to consider: The right allocation for your portfolio depends on your risk tolerance and investing timeline. You could start with a small allocation, say 2%, and then build your exposure as you get comfortable with these assets. To decide if emerging market investing is right for you, consider two questions: There are three common ways to invest in emerging markets. The lowest-risk option is purchasing a global securities fund that includes emerging markets exposure. You can also pursue a more targeted emerging markets investment with a dedicated ETF. The riskiest approach is via American Depository Receipts (ADRs), which are stocks of foreign companies trading on U.S. exchanges. Some global funds include emerging markets coverage alongside securities from developed countries. An example is Vanguard FTSE All-World ex-US ETF (VEU). The fund has more than 3,800 non-U.S. stocks from around the world. The emerging markets securities account for 26.4% of the portfolio. You can alternatively invest in a dedicated emerging markets fund. iShares MSCI Emerging Markets ETF (EEM) holds more than 800 emerging markets stocks. Another option is Vanguard Emerging Markets Bond Fund Investor Shares (VEMBX), which holds primarily government bonds from Mexico, South Africa, Turkey, Brazil, Peru and others. If you prefer individual positions, you can seek out emerging market stocks trading on U.S. exchanges. Examples include chip foundry Taiwan Semiconductor (TSM), Chinese tech company Alibaba (BABA) and PDD Holdings (PDD), an ecommerce company that originated in China. For more investing ideas, see best stocks to buy for 2025. Bottom Line Emerging market securities have risk, but they add a new layer of diversification and upside potential to your portfolio. If you decide to invest, move ahead with a small allocation to funds or individual stocks, and build your exposure over time. Depending on your risk tolerance and investing timeline, you could invest 2% to 9% of your portfolio in emerging markets. Emerging market stocks are riskier than U.S. stocks. Political unrest, regulatory changes and reactive currency values can affect business results and equity values. China, India, Brazil, South Korea, Taiwan and Mexico are emerging markets in 2025. Emerging markets can outperform developed markets. This occurred between 2003 and 2010. However, over the past 15 years, developed markets have performed better.
Yahoo
29-01-2025
- Business
- Yahoo
Trade Wars, Emerging Markets and DeepSeek: 3 Stocks to Watch
Since the Republicans began their term on Jan. 20, emerging market investors have been navigating a complex landscape shaped by U.S. policy shifts. Trump 2.0's list of proposed tariffs and immigration policy changes has started to make a significant impact on forex and global geopolitical dynamics. Emerging countries with significant trade exposure to the United States, such as Mexico and China, are likely to be hit the most by this tariff plan. While Mexico has been threatened with a 25% tariff, Trump has proposed a 10% tariff on Chinese imports, a moderated stance compared to earlier threats of 60%. However, China's recent breakthrough in AI with its DeepSeek AI Chatbot, which wiped billions off the valuation of U.S. tech companies in a single day, highlights a more fraught and complex trajectory for trade relations between the world's two largest economies. This environment is prompting investors to reassess their strategies, with some considering reallocating investments to markets less affected by U.S. trade actions. For instance, with growing U.S.-China trade tension, India's geopolitical position seems favorable for a safer investment. Further, India's market is largely domestically driven, making it less exposed to U.S. trade policies. Meanwhile, Brazil appears poised to gain from any trade tensions that redirect demand for agricultural products from Mexico. The iShares MSCI Emerging Markets ETF rose 1.1% immediately following the policy announcements last week. Image Source: Zacks Investment Research Here, we present three emerging market stocks,MercadoLibre MELI, Yatra Online YTRA and WNS WNS, which are expected to gain in 2025, capitalizing on their solid prospects. The Trump administration's inclination toward protectionism in the form of 'America First,' particularly through the imposition of tariffs, is a primary concern for emerging markets (EMs). The U.S. dollar, in fact, started strengthening following the election, a trend that is strongly impacting EMs, especially those with substantial dollar-denominated debt. Meanwhile, geopolitical factors continue to play a significant role in shaping investor sentiment. It is quite clear that Trump's second term has a far more challenging transactional strategy for China compared to the previous one. However, DeepSeek's emergence as a direct competitor to OpenAI's latest model sends a clear signal about China's ability to innovate and excel, even under the constraints of U.S. export restrictions. It underscores China's determination to achieve technological self-reliance and advance its global influence in critical industries like artificial intelligence. From an investment perspective, the implications are significant. The success of DeepSeek could attract a wave of funding into China's AI ecosystem, further fueling innovation and competition. Other than China, countries with significant trade surpluses with the United States, such as Mexico, South Korea and Taiwan, may face sharp market pressure too. While Mexico might bear the brunt in the fields of automotive and agriculture, South Korea and Taiwan might face hurdles with their semiconductor exports as the U.S. promotes domestic chip manufacturing. Meanwhile, Brazil, despite not being a direct target of U.S. trade measures, remains vulnerable to secondary effects stemming from global trade disruptions, particularly those involving China, its largest trading partner. In 2023, U.S. imports of goods and services from Brazil were $36.9 billion, down 2% from 2022 (U.S. Department of State report). This decline may aggravate in 2025 if there is no shift in trade interest found from Mexico, as stated earlier. On the other hand, despite the Republicans' tariff frenzy behavior, rumors are rife that U.S.-India economic ties will strengthen in 2025, leading to more opportunities for bilateral trade. As per IBEF (Indian Brand Equity Foundation), in fiscal 2024, India had a trade surplus of $36.8 billion with the United States. Experts believe that even under Trump 2.0's higher tariffs, India is still in a position to retaliate well with counter-tariffs. Further, trade diversion from China might prompt U.S. companies to seek alternative suppliers to minimize costs. India, with its expanding manufacturing base and competitive labor costs, could emerge as a preferred option. We have narrowed our search to the following three emerging market stocks based on a favorable Zacks Rank and solid metrics for the upcoming period. MercadoLibre: This e-commerce and fintech services company is well poised to take advantage of increasing Internet penetration. With its advanced technological and commercial solutions, MercadoLibre addresses typical cultural and geographic challenges associated with operating an online commerce platform in this part of the world. MELI carries a Zacks Rank #3 (Hold). Its 2025 sales and earnings growth rates are pegged at 22.5% and 33.3%, respectively. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. MercadoLibre, Inc. price | MercadoLibre, Inc. Quote Yatra: This online travel and tourism operator based in India provides information, pricing, availability and booking facilities for domestic and international air travel, domestic and international hotel bookings and holiday packages, among others. The company sees significant opportunity within its existing customer base. With Global India's expertise, YTRA expects the MICE (Meetings, Incentives, Conferences, and Exhibitions) sector to grow at a double-digit rate, potentially 20-25% annually over the next 2-3 years. Yatra carries a Zacks Rank #1 currently. Its fiscal 2025 revenue and earnings growth rates are pegged at 90.9% and 350%, respectively. Yatra Online, Inc. price | Yatra Online, Inc. Quote WNS: This India-based business process management (BPM) company provides data, voice, analytical, and business transformation services worldwide. WNS engages in diversified businesses, primarily manufacturing, retail, consumer packaged goods, media and entertainment, and telecommunication. WNS carries a Zacks Rank #3 currently. Its fiscal 2026 revenue and earnings growth rates are pegged at 7.4% and 11.1%, respectively. WNS (Holdings) Limited price | WNS (Holdings) Limited Quote Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WNS (Holdings) Limited (WNS) : Free Stock Analysis Report MercadoLibre, Inc. (MELI) : Free Stock Analysis Report Yatra Online, Inc. (YTRA) : Free Stock Analysis Report To read this article on click here. Zacks Investment Research Sign in to access your portfolio
