Emerging markets will be the most bullish stocks for 2018, that is one of InvestingHaven’s most explicit market calls.
Interestingly, it is not only InvestingHaven’s research team coming to that conclusion, but also some other financial analysts.
According to Barron’s, UBS has become bullish on emerging market stocks, presumably for 2018 and beyond. UBS says that emerging markets’ reaction to Fed rate hikes should remain benign if those hikes are driven by growth and not uncontrolled inflation. Investors should maintain a balanced, rather than a negative, view of emerging market assets.
This is interesting as InvestingHaven’s research team was among the first (a lonely voice) to note the outperformance of emerging markets after (because of?) the U.S. Fed interest rate hike, as released in this article back in February emerging markets bullish and break out after U.S. Fed rate hike.
Also, Bank of America (BofA) came out last week to end their 5-year long negative stance against emerging markets. BofA is now bullish emerging markets because “valuations in both Asia ex-Japan and emerging markets look attractive on both a price-to-earnings and a price-to-book basis, not just on their own, but also when compared with global valuations.”
Moreover, according to BofA, “the anchoring effect of five-year’s underperformance is a powerful downer. We think that the balance of risks is exactly the opposite. Investors should get out of the bunker and off the fence and make a longer-term bullish commitment.”
How much clearer can the message be?
The Templeton Emerging Markets Group believes that fundamentals in emerging countries look much better than their currency prices are reflecting. According to Frontera News, “the Group also expects inflation to fall in countries like Brazil, Russia, Colombia and Nigeria, allowing their respective central banks to take an accommodative stance with their monetary policies which can benefit both economic activity as well as local equities.” That is another bullish emerging markets call.
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