|Jeffrey Kleintop – Charles Schwab
The Long Period of Underperformance for Emerging Market Stocks May Finally Be Over
The end of the long period of emerging market stocks’ underperformance is supported by a recent change in trends for four major market drivers: global & domestic economic growth, currency movements, and commodity prices. As these trends enter a positive phase, emerging market stocks are poised to perform well. Potential risks including the rebound of the US dollar, the decline in China and any related decline in commodity prices which can halt the potential growth for emerging markets. Risks in China are likely only temporary as policymakers would take action to return the economy to a stable 6.5% growth trajectory.