Further sell-offs or potential upside? The 2019 outlook for emerging markets

Fell into bear market territory in 2018

The sell-off in emerging markets during 2018 is presenting investors with an opportunity to buy EMs at low valuations, according to investors, although trade war threats between China and President Trump will continue to be a blot on the horizon going into 2019.

The asset class as a whole suffered dramatic falls in 2018, particularly in Turkey and frontier market Argentina. Over one year to 31 December, MSCI Turkey lost 43% while MSCI Argentina fell by 52% after political and currency difficulties, causing the overall MSCI Emerging Markets index to fall 16% in dollar terms, closing at 965.667 on 31 December. According to Investec, emerging market equities are now trading on a 30% discount to developed market equities. EMs fall into bear market territory as Turkey crisis, commdities and Tencent bite Nick Price, manager of the Fidelity Em...