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Emerging Markets

Nov 07 2018

Emerging Markets: Not Persevering, Just “Preserving”

  • Nov 7, 2018

We’ll never know how world events might have evolved had Mitt Romney won the presidential election in 2012. But thanks to the wonderment of Emerging Markets’ underperformance, we can go right back to the last days preceding that fateful election.

Oct 05 2018

Narrow Performance Divergence Among EM May Not Last

  • Oct 5, 2018

We’ve previously noted the narrowing performance divergence between top- and bottom-performing Emerging Market (EM) countries in recent years.

Jun 29 2018

Emerging Markets: Down A Lot, But Not Really Cheap

  • Jun 29, 2018

The stock market liquidity squeeze we’ve discussed this year hasn’t played out quite like we expected. Traditionally, Fed tightening and slowing money growth hit Small Caps earlier, and harder, than the blue chip stocks...

May 05 2018

EM Country Rotation Based On A Stock Factor Model

  • May 5, 2018

Back testing shows stock-level factor alpha can be captured at the country level. With the rapid growth of single-country ETFs, this may prove an efficient, practical alternative to individual stock selection.

Jan 06 2018

Economic Performance: Powerful Factor For Country Rotation

  • Jan 6, 2018

In previous studies, we looked at two classic factors for employing a country rotation strategy: valuation and momentum.

Dec 07 2017

Sector Rotation: Momentum Versus Valuation Factor

  • Dec 7, 2017

For sector overweight/underweight decisions, applying a Momentum overweight with both EM and DM countries has been most successful.

Oct 06 2017

Valuation-Based Country Selection/Rotation

  • Oct 6, 2017

Despite cyclicality, over the longer term, investing in lower valuation countries ekes out better performance in an EM portfolio, and Dividend Yield showed the most consistency in terms of value factor effectiveness.

Sep 08 2017

Momentum-Based Country Rotation: EM Vs. DM

  • Sep 8, 2017

Last month we assessed the effectiveness of using valuation factors as a basis for country allocation. Using 20 years of data, our results showed that they work quite well specifically for Emerging Market (EM) country-rotation, however, the same valuation-based strategy does not appear to be value-added for Developed Market (DM) allocation/rotation.

Aug 05 2017

Valuation-Based Country Rotation: EM Vs. DM

  • Aug 5, 2017

Many studies have evaluated momentum factors for over/underweighting country exposures within a portfolio, but few have considered valuation factors for country rotation within the Emerging Market space.

Jun 07 2017

Emerging Markets: Fundamental Diffusion Indicators

  • Jun 7, 2017

Within EM, more robust growth is being exhibited by: 1) firms in Emerging Europe; 2) companies in Energy, Materials, and Financials; and, 3) larger cap companies.

Mar 07 2017

Emerging Markets: Momentum-Based Sector Rotation

  • Mar 7, 2017

Momentum factors are effective in differentiating EM sector performance, with High Momentum significantly outperforming Low Momentum. Unfortunately, there is a lack of investable EM sector vehicles.

Sep 08 2016

EM: The Case For Waiting...

  • Sep 8, 2016

We’ve mentioned that concerns over potential seasonal weakness in September and October seem pronounced this year, perhaps because the year has so far turned out a pleasant surprise following its horrendous start.

Sep 08 2016

EM Leadership: Just The Beginning?

  • Sep 8, 2016

Our EM Allocation Model triggered a BUY at the end of August after 5 1/2-years in bear mode. This upgrade is consistent with a cyclical leadership run of one to four years relative to Developed Markets.

Aug 05 2016

From Turkey To Thailand, EM Political Risks Hard To Dodge

  • Aug 5, 2016

A military coup was staged in Turkey on Friday, July 15th, but it was quickly suppressed. The damage, however, was done.

May 06 2016

EM: Improved Sentiment But Macro Risks Still Dominate

  • May 6, 2016

Positive forces may be transient. Be wary of EM’s high correlation to commodities and Chinese stocks.

May 06 2016

Xenophobia Gone Too Far?

  • May 6, 2016

Donald Trump’s all-but-certain Republican nomination is somehow a fitting capstone to a stock market era in which it’s paid to be provincial.

Apr 07 2016

The Fed’s Capitulation To The Dovish Side— A Win-Win For EM & U.S.

  • Apr 7, 2016

We have mentioned a number of times that China had experienced a very unpleasant “second-hand” tightening due to its peg to the dollar. Its trade competitiveness has suffered tremendously. With a weaker dollar the Chinese Yuan can re-gain some of its competitiveness while maintaining its peg to the dollar. A rare win-win in today’s convoluted world of finance.

Nov 06 2015

What’s Driving EM Currency Weakness?

  • Nov 6, 2015

A strong dollar and low commodity prices are major forces dragging down EM currencies across the board.

Sep 09 2015

The EM "Trap"

  • Sep 9, 2015
We expect EM valuations will undercut their 2008 lows before the current market decline has run its course. That washout might serve up the best stock market bargains in many years.
Aug 07 2015

Emerging Markets: A Half-Off Sale!

  • Aug 7, 2015

The Chinese government’s repeated stock market intervention attempts over the past several weeks have been remarkable, and obviously antithetical to the country’s move toward a more laissez faire corporate environment.

Jun 05 2015

Searching For Growth In Emerging Markets

  • Jun 5, 2015

Even though the ten EM sectors are growing at a much stronger pace than corresponding U.S. sectors on the Top-Line, only a small margin exceed the U.S. in terms of EPS growth.

May 08 2015

Emerging Markets: Close… But Not Quite

  • May 8, 2015

Emerging Market stocks are probably the cheapest equity subgroup in the world today, trading at 13.0x our 5-Year Normalized EPS estimate—much lower than that of foreign Developed Markets (17.6x) and the S&P 500 (21.3x). But, EM stocks have languished near these valuation levels for almost three years.

Dec 05 2014

The Surprising Winners In Emerging Markets

  • Dec 5, 2014

While we expect an eventual break in this relationship, today Emerging Market equities are following, fairly tightly, the cycle of industrial commodities—a cycle that rolled over (on a secular basis, we believe) in 2011.

Dec 05 2014

Declining Crude Prices Good For Emerging Markets?

  • Dec 5, 2014

The price of crude oil staged a dramatic change of fate in the past few months, and the bottom is still nowhere in sight.

Aug 07 2014

Time To Rethink EM?

  • Aug 7, 2014

We slashed the Core Fund’s Emerging Market equity position in 2011, a decision that paid off handsomely until very recently. Is it time to rebuild EM exposure?

Aug 07 2014

Correlation Breakdowns

  • Aug 7, 2014

We’d rather eat broken glass than have to forecast financial market correlations, but that doesn’t mean we ignore them altogether.

Jul 08 2014

Electronic Payment Systems: Can Strong Performance Persist?

  • Jul 8, 2014

As a follow up to a 2012 Special Study, we examine the growth in Electronic Payment Systems. Global competition in the industry has significantly heated up, as more countries are setting up their own national payment systems, relying much less on the “big four” global giants.

May 07 2014

EM Sentiment Readings Reach Extremes

  • May 7, 2014

A few measures are suggesting that investor sentiment towards EM has reached a low ebb.

Feb 07 2014

Emerging Market Currencies: January’s Panic Overdone

  • Feb 7, 2014

The emerging markets are in a much better financial position to weather any financial turmoil than they have been in the past.

Feb 07 2014

The EM Value Trap?

  • Feb 7, 2014

EM valuations look cheap in a stock market world that otherwise doesn’t. But even their “cheapness” bothers us.

Feb 07 2014

Can The EM Problem Spread To DM? Yes, If It Gets Bad Enough

  • Feb 7, 2014

The current EM weakness is not yet a full-blown crisis but, if it does become one, it will drag down developed economies too.

Jan 08 2014

Emerging Markets: Dismal 2013, Hopeful 2014

  • Jan 8, 2014

What worked, what didn’t; what you need to consider for investing in Emerging Markets this year.

Nov 07 2013

Supply/Demand Dynamics Drive Three Emerging Market Energy Themes

  • Nov 7, 2013

We find hidden opportunities in Equipment & Services Providers, Coal and Natural Gas. We consider these themes longer term holdings instead of short-term plays

Sep 10 2013

Navigating Reversals In The Emerging Markets

  • Sep 10, 2013

Identifying opportunities given this summer’s momentum reversals and currency vulnerabilities.

Aug 07 2013

A Comprehensive Look At The Emerging Markets: Diagnosis And Prognosis

  • Aug 7, 2013

We examine Emerging Markets from both the top-down and bottom-up perspectives as we try to identify where to move and what to expect. We check in on two successful EM thematic group ideas as well.

Jul 12 2013

Is Overcapacity A Problem For Emerging Market Airlines?

  • Jul 12, 2013

Airlines are Attractive in both group models, but there could be trouble on the horizon as emerging market carriers face the challenges of rapid growth.

May 01 2013

The Disappearing "Large" Effect And Emerging Market Performance

  • May 1, 2013

While U.S. stocks have surged this year, Emerging Markets have languished. What is going on in Emerging  Markets to cause this unusual situation?

Apr 05 2013

"Muddle Through"

  • Apr 5, 2013

The global economy is stuck in a “muddle through” mode with developed and emerging countries showing divergence in terms of leading indicators. Despite this divergence, they share one thing in common: an upturn in inflation. How much more room there is for easing is a key determinant of asset market performance.

 

Mar 06 2013

Stock Picking Opportunities From Emerging Market ETFs

  • Mar 6, 2013

Changes in a major EM ETF’s benchmark and another big player’s new EM ETF introduction could provide stock pickers opportunities in select Emerging Markets.

Nov 06 2012

Mapping The Emerging Market Health Care Sector

  • Nov 6, 2012

We’ve published a series of research notes detailing our thoughts on the Health Care sector in Emerging Asia and formed a thematic group “Asia Healthy Tigers.” Even though most of the investable companies in Emerging Market Health Care are located in Asia, we decided to expand to other regions as well.