“Uncertainty around the outlook has increased. Escalating trade tensions and fears of U.S. overheating, along with rising interest rates, have contributed to a stronger U.S. dollar and tightening financial conditions. This has hit EM assets the hardest and created pockets of value, in our view,” said BlackRock.
Earnings growth in developing economies could be a sign of upside to come for emerging markets stocks and ETFs.
“EM earnings momentum is solid and increasingly broad-based. The median earnings growth for stocks in the MSCI EM Index for 2018 and 2019 is forecast to be 10.1% and 13.6%, respectively,” said BlackRock. “EM earnings growth was disproportionately concentrated in the tech sector in 2017, but eight of 11 sectors are forecast to deliver double-digit earnings growth in 2018. Several other trends underpinning the appeal of EM equities are intact.”
For more ETF trends in emerging markets, click here.