As the U.S. continues to toe the line between the peak of the market and an eventual slowdown, the emerging market (EM) space as a whole has the capability to continue powering the global economy.
The U.S. instituted its third rate cut last month, but did not allude to further cuts according to its minutes from the last meeting. Per a Bloomberg report, EM nations “have room to cut further. That should help support the world economy amid its weakest expansion in a decade.”
“In most cases, emerging markets are now in the comfortable position to be able to cushion an economic downturn with monetary easing,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “This easing of monetary policy is likely to give a lift to EM economies, and this would also be positive for developed countries.”
Additionally, the Bloomberg report noted that global investment firm Morgan Stanley is forecasting growth for EM to the tune of “4.4% next year, more than three times the 1.3% rate anticipated in the Group of 10 economies.”
“After 20 of the 32 central banks monitored by the bank eased policy in 2019, its economists forecast 13 will do so in 2020 with the cuts concentrated in emerging markets helping to reduce the global weighted average policy rate to a seven-year low by March. India, Brazil, Indonesia and Turkey can all strike if they need to,” the report said.
All that said, 2020 could be the year of EM.
“2020 might be shaping up to be a good year for emerging markets,” said Kunal Ghosh, a San Diego-based portfolio manager at Allianz Global Investors.
One EM ETF to consider is the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ). EMQQ tracks an index of leading Internet and eCommerce companies serving Emerging Markets. It seeks to offer investors exposure to the growth of online consumption in the developing world.
EMQQ holdings operate in diverse markets such as India, China, Brazil, Turkey, Nigeria, and Indonesia, to name a few. To be included, the companies must derive their profits from Ecommerce or Internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming, and online travel.
EMQQ is the first ETF to focus on the universe of internet and ecommerce innovators in some of the fastest-growing markets in the world. Per Yahoo Finance performance numbers, EMQQ is up over 24.88% as of Nov. 21.
For more market trends, visit ETF Trends.