Nedgroup: Volatility is unearthing opportunity in emerging markets

Big structural winners

Emerging from the sudden economic stop of the pandemic, into a global inflationary boom, Russia’s invasion of Ukraine marks the emergence of a new and more volatile investment regime in global equities.

The market environment promises to be difficult for investors in the short term as fears over inflation and rising central bank rates have killed appetite for many of the winning stocks of the previous cycle. Analysis of global money trends points to a slowdown led by Fed tightening. In addition to raising rates, the Fed is accelerating quantitative tightening by reducing its purchases and holdings of financial assets. This draws liquidity out of financial assets and will ultimately precipitate an economic slowdown with the hope that this cools inflation. While the economic backdrop for ...