Emerging markets weather market storms
They say the recent tumble stems from a volatile U.S. economy and once things settle down, emerging markets should be heading up.
Emerging markets last month resisted U.S. worries over the housing market and gained almost 5%, according to index provider Standard and Poor's. Meanwhile, developed markets posted a 2% loss.
However, last week's market storm didn't bypass the emerging economies.
Hong Kong shares lost more than 6% over the week, India shed almost 5%, and Russian shares dropped 2%.
But analysts say emerging markets are healthier from a macroeconomic point of view and it may be too early to lose faith in them.
“The opportunity in the emerging markets, the rate of growth, the potential developments of the market, the undervaluation of assets make emerging markets really still, in the longer term, the best place to invest your money,” insighted Roland Nash, the Head of research at Rencap.
Russia's no exception, according to Fitch Ratings Agency. High oil prices and strong investment levels support the country's continued growth. And given that Russia has underperformed other emerging markets this year, it may be a good time to buy cheap.
“We would expect the sub-prime issues to be resolved over the course of 1 to 3 months and then we have a strong rally. So if we do see a strong drop, we would recommend investors to see it as a buying opportunity, get into the market cheap and wait for the RTS to go back up to 2100 by early next year,” Ron Smith, the head of research at Alfa-Bank Group predicts.
Emerging markets may not be immune from the movements of developed markets. But given strong macroeconomic fundamentals they now seem to be much better equipped to fend off the storm.