How This Emerging Market Selloff is Different

A recent article in The Wall Street Journal addresses the current selloff in emerging markets stocks and how it differs from past routs. “The deepening selloff in emerging markets this year,” the article reports, “is one of the biggest of the past decade—and differs in ways that highlight how the developing world has changed.” The current environment, it says, was triggered by rising interest rates and trade tensions along with other shifts, including the emergence… Read More

The Worst Stock Market Isn’t Cheap Enough

An article in Bloomberg explains why investors are “staying on the sidelines despite the plunge in Philippine stocks.” The article offers comments from Metropolitan Bank & Trust Co.’s head of equities, John Padilla, who cites concerns about high inflation, rising oil prices, a weakening peso, higher interest rates and lower liquidity. Between last December and this past October, the article reports, the Philippine Stock Exchange plunged 17 percent, “becoming the world’s biggest losing equity market… Read More

Value Versus Growth in Emerging Markets

“Emerging markets are flashing warning signs, but don’t tell that to value stocks,” writes Bloomberg columnist Nir Kaissar, who adds, “To some investors’ surprise, value stocks are holding up better than growth.”   Theoretically, Kaissar explains, that’s not supposed to happen. “Value stocks, after all, are cheaper than growth for a reason: They represent companies, and sometimes whole sectors, that have fallen on hard times or are struggling to grow.” But in reality, he says,… Read More

Edgy Investors Pulling Out of Risky Economies

“A financial panic is again gripping some of the world’s developing economies,” according to an article in The New York Times. This is in sharp contrast to the climate in the U.S., the article reports, “where a nearly decade-long bull market continues amid buoyant economic conditions.” It adds that this has occurred before (citing the Mexican peso crisis of 1994, the Thai baht collapse of 1997 and Russia’s 1998 default), adding, “investors had to contend… Read More

Swedroe on Factors in Emerging Market Stocks

In a recent article for ETF.com, BAM Alliance director of research Larry Swedroe outlines findings of an August 2018 study on factor-based investing titled, “The Cross-Section of Equity Returns in Emerging Markets.” Among the many findings of the study–which covers 27 emerging market countries for the period between 1988 and 2014—here are some highlights: Size, value and momentum anomalies are statistically significant using value-weighted portfolios; After controlling for company size, the book-to-market ratio and momentum… Read More

Emerging Markets Reflect Investor Fear

Emerging market stocks are “taking the brunt of investors’ fears,” writes Nir Kaissar in a Bloomberg article last month, noting a drop in the MSCI Emerging Markets Index on a year-to-date basis against S&P 500 gains. Bloomberg conducted a survey of 20 investors, traders and strategists regarding what they think are the biggest drivers for EM. The top responses included: Fed rate outlook, trade conflicts, EM central bank outlook, China, oil and commodity prices, and local… Read More

Co-Manager of Bond Fund with 8% Returns Shares Market Insights

Although emerging bond funds have hit a rough patch, many EM economies are in a growth spurt, “supported by healthy demand for commodities and other exports in end market such as Europe.” This according to an article in Barron’s. The article quotes co-manager of the TCW Emerging Markets Income fund Penelope Foley, who says that even if rising rates pressure prices, bond yields for dollar-based debt average around 6%. The upshot, she says, “should be… Read More

Swedroe on Active Management in Emerging Markets

In a recent article in ETF.com, BAM Alliance director of research Larry Swedroe debates claims that active management is the “winning strategy” in emerging markets. Citing SPIVA and Morningstar data as well as academic research, Swedroe makes the case that, “at least for investors who do not have access to institutional EM funds, active management is a loser’s game.” For example, writes Swedroe, SPIVA data shows that for the last 5-, 10- and 15-year periods,… Read More

Emerging Markets in Tough Spot, Says Harvard Professor Reinhart

The investment opportunity many see in emerging markets is being called into question by Cuban-born economist and Harvard professor Carmen Reinhart. This according to a recent Bloomberg article. Reinhart cites debt, weakening trade terms, rising interest rates and slow growth as reasons for concern, arguing that developing nations are in fact worse off than during the 2008 global financial crisis. He makes the following points: The more tightening by the Fed, “the more the anticipation… Read More

Société Generale Strategist Favors Emerging Markets

“Money managers should think twice before letting a bumpy month of losses scare them away from emerging markets,” according to a recent Bloomberg article. The article cites comments from Société Generale cross-assets strategist Bruno Braizinha, who argues that developing countries are “better suited to withstand a global downturn than in the past,” and that any upcoming U.S. recession would be less severe than the global financial crisis in 2008. Emerging market fundamentals are, he says,… Read More