Low interest rates are not yet at the lowest… in Emerging Markets. It’s time to grab a slice of this market. Article originally published at Master Investor Magazine February 2020 Issue 59 p.30-35.
On my last publication at The Master Investor Magazine, back in January, I wrote about the need for investors to become more and more selective, as this bull market may be running out of steam. After 10 years of massive central bank stimulus in the developed world, investors had no other option than to reduce exposure to bonds to a minimum and exposure to equities to a maximum . But with the S&P 500 rising almost 30% in 2019 (after years rising), one starts asking questions about the sustainability of the uptrend.
While I believe there is still room for a continuing uptrend, the upside potential for US markets seems limited.
I’m not foreseeing a hard landing for the US, just a late-cycle economy growing at a limited pace, which is positive for emerging economies
Interest rates are low everywhere, but there is much more margin for them to be cut in Emerging Markets than in Developed Markets. Investors can still look for opportunities in equities, but now is the time to look outside the developed world. While the S&P almost tripled in value during the last 10 years, Emerging Markets, as a whole, experienced rises of just 10%. Current prices for equities from Frontier and Emerging Markets reflect conservative valuations, in particular when compared with equities from the US.
You can read my full article on how to grab a slice of Emerging Markets at The Master Investor Magazine.