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Bloomberg
After a rally from mid-August gave way to another sell-off through early September, emerging-market investors would be forgiven for being wary of new signs that calm is returning.
But with the dollar struggling to make headway and equity valuations in the developing economies near the lowest this year, the scene may be set for more gains. So say commentators from JPMorgan Asset Management to Wells Fargo Asset Management. There’s even optimism that the world’s biggest economies will reach a truce on trade tariffs after the breakthrough reached between the US, Canada and Mexico on Sunday, potentially removing one of the biggest risks to the sector.
“It does look a lot more attractive at the moment to be buying the dip we have seen in emerging-market assets because they’re much better priced than they were in the heat of the moment at the beginning of the year,†said Marc Ostwald, the London-based global strategist at ADM Investor Services.
For sure, there are headwinds, including rising US rates and political troubles in countries from Brazil to Turkey and South Africa. Not to mention the Italian fiscal turmoil that’s currently sapping risk appetite, sending a gauge of emerging-market currencies lower on Tuesday.