How exposed are you to emerging markets? The worst sell off since 2015 has hit emerging market currencies due to the rising oil price and continued strength of the US dollar. Argentina is linking up with the IMF and the prospect of a trade war between the US and China looms over the Asia Pacific region.
There are bright spots for emerging markets however, as many of the recent gains for emerging markets have come from the region's tech giants such as Tencent and Baidu. In addition, the growing middle classes and younger populations of emerging markets provide more opportunities for growth than more mature economies. Emerging market currencies will most likely continue to suffer in the short term however, as "carry-trades" are unwound, putting further downward pressure on them.
Risk to trade
The looming trade war is also a huge factor with the "Made in China 2025" policy coming under attack from the US due to the initiative's goal of making China less dependent on US technology. The US dollar is seen as a safe haven in difficult times and an influx into the USD will put further pressure on emerging markets.
Wealth care providers
The possible emergence of turmoil in emerging markets is not a cause for panic. It's possible to remain exposed to the region by selecting quality funds run by experienced managers that are able to seize opportunities in uncertain times. For those investors that are able to tolerate some risk, there are opportunities to be pursued.
Ensure you are up to date with the latest in the markets and that your current investments are still right for you by speaking to your adviser. You can achieve your long term goals with the right advice!
The value of investments and income from them may go down as well as up and you may not get back the original amount invested.
Information is based on our current understanding of taxation legislation and regulations which is subject to change.
Past performance is not a reliable indicator of future performance.
Inside Money: Don’t get left in the lurch in emerging market crisis