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Saturday, 18 September 2021
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The pandemic has shown that the emerging market complex is more mature, with central bank discipline, strong demand for commodities and a positive outlook for currencies. Diversification into EM is worth a look.
A broader rebound beyond tech companies is likely to accelerate. Structural reforms may regain momentum after COVID and a lower risk premium is warranted for emerging markets equities compared with prior crises.
The outlook for emerging market debt in 2021 revolves around liquidity, uneven recoveries and debt sustainability. Damage has been done to many countries’ finances and watch for central banks withdrawing support.
It's time for equity prices to more closely tie to a company’s underlying near-term earnings trajectory and financial strength. Despite the market trading at record levels, some stocks have been left behind.
Growth was the place to be through the pandemic while value managers couldn't catch a break. It's the long run that matters but 2020 delivered pleasure or pain for many managers.
Emerging market equities performed strongly up to the GFC but have gone sideways since. In this cyclical sector, there's an opportunity to catch up boosted by strong inflows, a lower US dollar and tech adoption.
For long-term investors, the most important factor driving returns is the price paid to acquire a stock. Emerging Markets stocks exhibit favourable valuations on both an absolute and relative basis.
Many investors are looking to emerging markets due to stretched valuations in developed markets, but there are particular reasons why choosing a passive ETF in emerging markets may not be optimal.
As interest rates fell in recent years, there was a push into emerging markets debt, but as worldwide central bank stimulus reduces, many of these 'emerging' countries are showing why they are poorly rated.
Emerging markets have the world’s fastest growth in populations, numbers of the middle class, technology adoption, and even technology creation. They are no longer playing catch up, they are leading the tech revolution.
A sign that the strong credit cycle is ending is the funding of some emerging market governments that are more than likely to default, but demand is driven by desire for yield regardless of risk.
For many investors, allocations to emerging markets over the years have proved disappointing. An emphasis on corporate governance and social issues can help unlock some of the potential.
Who knew? With some surprise results, the Government is on unexpected firm ground in asking people to draw on all their assets in retirement, although the comments show what feisty and informed readers we have.
It's a remarkable statistic. In any year since 1875, if you had invested in the Australian stock index, turned away and come back eight years later, your average return would be 120% with no negative periods.
Never stand between Australian households and an uncapped government programme with $3 billion in ‘free money’ to build or renovate their homes. But excess supply is coming with an absence of net migration.
Picking macro trends is difficult. What may seem logical and compelling one minute may completely change a few months later. There are better rewards from focussing on identifying the best companies at good prices.
The RBA Governor says rising house prices are due to "the design of our taxation and social security systems". The OECD says "the prolonged boom in house prices has inflated the wealth of many pensioners without impacting their pension eligibility." What's your view?
Some high-quality companies have emerged even stronger since the onset of COVID and are well placed for outperformance. We call these the ‘COVID Opportunists’ as they are now dominating their specific sectors.