Moreover, Donald Trump likely feels an even greater need to make his mark ahead of the US presidential elections in November, which could further escalate the conflict between the US and China. We can see this at the moment with the popular Chinese video app, TikTok, which Donald Trump has threatened to ban in the US due to fears it could give the Chinese authorities access to data on US users.
“In the short term, however, we are not that concerned about these disputes, as they are currently mostly just noise and have minimal economic significance,” says Lars Skovgaard Andersen. Oil price and exchange rates positive factors
Falling oil prices have been an important theme for emerging markets this year, but this has been positive overall for major Asian economies like China and India, who are net importers of oil. The biggest losers are to be found elsewhere among emerging markets, for example Russia and Brazil.
Exchange rates and interest rates are other important variables. The US dollar (USD) has weakened noticeably of late, which makes servicing USD-denominated debt cheaper for emerging market companies and governments. We expect the very accommodative monetary policy of the US central bank, the Fed, will help keep the dollar weak.
Hence, the overall picture at the moment is of a number of factors pointing in the right direction for emerging markets – but don’t forget that emerging market equities are by definition associated with a high risk.
“We generally recommend that investors have around 10% of their equity portfolio invested in emerging market equities – though right now that could be slightly higher,” says Lars Skovgaard Andersen.This content is not investment advice - you should always speak to an advisor about how a possible investment matches your investment profile before making an investment.