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Wednesday, 20 February 2019

Emerging markets keep traders, investors and analysts on their toes

Emerging markets keep traders, investors and analysts on their toes: Emerging markets have seen a rapid increase of inflows this year, across both equities and fixed income, BlackRock’s head of iShares EMEA investment strategy, Wei Li, said on Bloomberg TV on Monday (watch, runtime: 2:40). Li characterizes emerging markets as a “bright spot” amid a broadly risk-averse global investor base. This contrasts with news earlier this week that local risks are starting to dominate trader concerns more than worries about global growth.

What are we to make of this? One takeaway is that, with chances of a China-US trade agreement increasing, so too is investor optimism — a sentiment that is undoubtedly driving emerging markets as a whole. JP Morgan concurs, calling valuations “quite attractive” in a report published this month, and estimating an aggregate five-year return of 14% for EM shares.

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