According to the experts in leading American multinational investment bank and financial services company, Morgan Stanley, investor s in emerging markets will have a bumper 2019 with countries like Brazil, Thailand, Indonesia, India, Peru and Poland at the forefront of the bank’s preference for emerging markets stocks.
With expansion in the United States predicted to slow down in 2019, a Global Strategy Outlook for 2019 is looking the way of emerging markets in 2019 despite stocks in these economies having a rough 2018.
“We think the bear market is mostly complete for EM,” the bank said in the report dated Nov. 25, implying that stocks in the emerging markets may soon rise. “We are taking larger relative positions and adding to EM.”
Investors took their monies away from emerging markets in 2018, consequently bringing more assets in the United States due to an increase in bond yields and the appreciation of the greenback. This is in addition to escalating financial issues in countries like Argentina and Turkey giving investors more reasons to move away from emerging markets.
Therefore, it is not surprising that Morgan Stanley seems to prefer stocks in emerging markets to those in the United States with stable growth predicted in those economies as compared to a slowing expansion in the U.S.
Where do you put your money in the New Year?
According to Morgan Stanley, the major “overweight” countries are Brazil, Thailand, Indonesia, India, Peru and Poland. Countries like Mexico, the Philippines, Colombia, Greece and the United Arab Emirates are classified as the “underweights.”
Morgan Stanley has also pitched its tent towards “value stocks” over “growth stocks”. Value stocks are referred to as listed companies that are trading at a price below where they should, while growth stocks are firms seem to have a lot of growth potential.
“We find that value stocks are concentrated in financials, materials, energy and utilities (in that order),” said Morgan Stanley. The bank added that it has an overweight stance on all those four sectors, and “a negative sector bias in tech, healthcare and consumer.”
The bank also highlighted another investment idea in its report. The investment idea is investment in an overweight in metals and mining firms, which are said to be “experiencing secular support for its earnings power.”
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