Emerging Markets a Bargain or Fool’s Gold?

A recent Financial Times article debates the long-standing assertion by GMO that emerging market shares are a good deal, citing the firm’s comment that “EM equities are as appealing as ever, given they are as cheap as they have been since the heady days of the tech bubble.” The article rebuts, “Yet take a look beneath the surface of index-level data and you could argue that emerging market stocks are hardly the baring that they… Read More

A Better Use of Data in Emerging Market Investing

An article in Barron’s discusses how factor investing hasn’t taken on in emerging markets as much as in other asset classes, adding that “investors shouldn’t overlook the opportunities.” The article cites Morningstar data showing that ETFs are more heavily invested in developed countries than in emerging ones, but highlights research conducted last year by the Dutch asset-management firm Robeco showing that a portfolio favoring value and momentum stocks within the MSCI Emerging Markets Index generated… Read More

Emerging Markets Are a Buy

An article in Fortune reports that, while many including such finance experts as Jeremy Grantham of GMO, Mark Mobius and Rob Arnott of Research Affiliates sing the praises of emerging market stocks, “to commonsense civilians and other skeptics, they look and feel like a trap. Who’s right?” The article outlines some of the risks and opportunities inherent in EM: By wagering on China, Mexico and India, investors are “embarking on a potentially lucrative but almost… Read More

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