Emerging markets and the exchange traded funds (ETFs) that follow them appear to benefit from the global credit crunch as long as there isn’t a recession. According to an investment strategy report by Merrill Lynch, analysts do not detect one on the horizon. The report says, "Nominal GDP growth of 12% in emerging markets should be more than sufficient to deliver the consensus EPS growth target of 15% next year." Fundamentals are strong, yet emerging markets are still undervalued, underowned, undercapitalized and underleveraged, reports Trang Ho for Investor’s Business Daily.
Next year, it appears the consumer and infrastructure sectors of the BRIC countries (Brazil, Russia, India and China) will take center stage thanks to higher global inflation and strong domestic demand. One way to play the emerging-market countries is through:
Energy, financials and telecommunications dominate in both ETFs, while EEB has higher weightings in materials and technology. EEB caps energy at 25% of assets, and BIK caps at 39%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.