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Emerging Markets: Widen Your Lens Beyond Trade Tensions

By Advisor Perspectives
Financial Services

Emerging markets were up pretty sharply through the beginning of May: about 13% for equities, almost 7% for debt. Part of that was because of this consensus that developed that the US and China would reach some agreement on trade and there might be some historic handshake that would resolve their differences.

On May 5th, President Trump tweeted his intention to raise tariffs on Chinese goods, which completely upended that market consensus. So while the underlying growth from emerging companies remains strong, it’s expected that earnings growth will be about 10% this year and next, and that should underpin strong returns for equities and for bonds. The fact is that there is likely to be a lot more volatility along the way, so I think a more risk-managed approach will be particularly important in the coming months.

Read more at Advisor Perspectives.

Photo: Gage Skidmore

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