Online Reporter
Wall Street’s emerging-market faithful are finally seeing better returns after missing out for years as US stocks soared.
Morgan Stanley Investment Management, AQR Capital Management, Bank of America Corp and Franklin Templeton are among those betting the tables may finally be turning in favour of developing-market equities.
Bank of America’s Michael Hartnett calls them “the next bull market.” AQR predicts they’ll deliver local-currency returns of almost 6 percent annually in the coming five to 10 years, outpacing a 4 percent gain for US shares in dollars.
Despite the S&P 500’s rebound of recent weeks, the gauge was flat on the year as of Friday’s close, while an emerging-market equivalent is up 10 percent.
The gain is kindling hopes that a decade and a half of thwarted promise — in which the US benchmark rocketed more than 400 percent versus a meager 7 percent advance for developing-nation shares — could be at an end.
Among the reasons: a struggling dollar, rollercoaster S&P and questions over the safe-haven status of Treasuries, all of which have investors increasingly looking away from the US as President Donald Trump’s trade war takes off.
Concerns about ballooning debt and deficits, which prompted Moody’s Ratings on Friday to downgrade the US credit rating, add to the headwinds for continued US market outperformance.
Some investors seeking alternatives to the US market have headed to the Japanese yen, German bunds and euro. — Bloomberg.
