Emerging Market Growth in Developed Market Stocks

Emerging market equities are not for the faint of heart. Even the most iron-bellied investors in the sector have had their share of heartburn over the past year.  First there was Fed tapering … and the slow-motion currency crisis that followed in Turkey, South Africa and Argentina, among others. Then there was the on-again/off-again unrest in Turkey and Venezuela. And now, we have the Russia/Ukraine crisis that has yet to be resolved.

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-Igor P Purlantov

Currency Risks Could Grow in Emerging Markets

Corporations could be entering a new phase of currency volatility. Emerging-market currencies in countries such as Argentina, India and China could have a bigger impact on earnings in the coming years.  “In the very long term there’s a good reason to invest in emerging markets, however in the next few years I think we’ll see a lot of volatility,” said Bilal Hafeez, Deutsche Bank AG’s global head of foreign exchange strategy.

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Emerging, But No Longer A Mother Lode

When it comes to investing in emerging markets, few companies have been as gung-ho as Diageo, the British maker of the Guinness, Johnnie Walker and Smirnoff brands. But now that troubles are cropping up in many such countries around the world, Diageo has turned from cheerleader to excuse-monger.Government crackdowns on high-end drinking in China. Inflation and currency worries in Argentina and Venezuela. Political turmoil in Thailand; saturated beer markets in Nigeria; a religious backlash in Turkey. These and other adversities were cited by company officials this year when Diageo announced disappointing profits.

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Where to Find the Best Opportunities in Emerging Markets

 

There are a significant number of concerns regarding the emerging markets at this time. Investors are asking if emerging market stocks are a good buy right now; are the troubles over or are there still more to come?  As it stands, it seems further troubles are brewing in the emerging markets, as the Federal Reserve tapers its quantitative easing program. We have seen currencies in countries like Turkey, South Africa, Russia, and Argentina decline significantly.

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