Wednesday, September 9, 2015

Rocky Waters in Emerging Markets

The U.S. stock market has been decidedly blah this year, but the realm of emerging markets has been a whole other story. The slowdown in the Chinese economy and equity market - and remember, China is still considered an emerging market rather than a developed one - has played havoc with that asset class. The MSCI Emerging Markets index fund, considered a benchmark, has lost 25 percent of its value over the past year.

Investors have noticed this, and responded. They've pulled out a whopping $40 billion from emerging markets stocks this year. That's after investing a net of $104 billion in those stocks over the five years through 2013.

Emerging markets stocks have fallen so much that they now look like bargains. It now costs half as much to buy a dollar's worth of earnings from emerging markets companies than to buy a dollar's worth of earnings from an American stock.

No comments:

Post a Comment