“The concept of fundamental economic reform across emerging markets– including in China, India, Mexico and Brazil – is gathering momentum and could cause a re-rating of the asset class as investors anticipate lower deficits, inflation and interest rates, and stronger currencies and growth in the longer term,” according to Smithie, Barron’s reports.
Nevertheless, the developing markets exhibit wider swings and greater bouts of volatility, so investors should keep a closer eye on the emerging space.
“I don’t think there are many buy-and-hold investments in the emerging markets,” Peter Marber, the head of emerging markets investments at Loomis, Sayles, said. “They need to be actively traded because they are so volatile. Foreign exchange fluctuations are changing quickly relative to U.S. stocks.” [Really Cheap Russian Stocks]
At ETF Trends, we try to adhere to a trend following strategy. For instance, we utilize the 200-day exponential moving average as our guide to navigate the markets. So far, the emerging markets have not maintained a solid forward momentum, with EEM still 3.4% below its 200-day and VWO 2.1% below its long-term trend.
For more information on developing countries, visit our emerging markets category.
Max Chen contributed to this article.