Industry Voice: Global Emerging Markets - Opportunities still exist, despite recent strength

clock • 3 min read

At T.Rowe Price, we believe global emerging markets (EMs) continue to offer attractive investment opportunities even after a strong 2017. Many of these markets are enjoying ongoing progress of meaningful economic and political reforms, as well as improved current account balances and lower inflation.

key points

  • Emerging markets (EM) equities still appear cheaper than developed markets and versus their own historical levels, although they are more expensive than a year ago.
  • Although yields on EM bonds have fallen (and prices have risen), the asset class offers broadly healthy relative fundamentals and attractive yields.
  • Risks include a sharp China slowdown, a Korean conflict, the withdrawal of quantitative easing, or a commodity price collapse.
  • Active management lets equity investors focus on attractive pockets of EM growth and allows bond investors to own assets outside their benchmark.

Emerging market growth looks set to continue

Broadly speaking, economic growth in EMs outpaced developed markets' growth in 2017. This stronger growth should continue in 2018 as countries like Brazil, Russia and India improve. Growth should support further gains in corporate earnings, which recovered strongly in 2017. Furthermore, we continue to see many companies undertake steps to control costs and improve profits. Read our 2018 Global Market Outlook




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