What does the year have in store for emerging markets?

The prospects of select emerging markets, especially in Europe and Asia, rank high relative to other asset classes, says Michael Kruger, investment analyst at Morningstar Investment Management South Africa.

This includes US equities, Kruger says in our January Emerging Markets Report.

Similarly for fixed income, depressed developed market bond yields should drive investment toward higher yield emerging market sovereign debt.

Our report also features Chetan Sehgal, a portfolio management director at Franklin Templeton, who says that improving earnings expectations will contribute to making emerging market equities look attractive.

However, Maarten-Jan Bakkum, senior emerging markets strategist at NN Investment Partners, said the emerging markets’ growth outlook for the next few years is bleak for both bonds and equities.

“Global interest rates remain low enough to sustain yield-searching portfolio flows to EM debt, but these positive capital flows are unlikely to compensate for the expected slowdown in foreign direct investments to EM,” he says. 

From our December issue:
Emerging markets: A sea of non-tranquility

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