Banks "Wall Street" bet on emerging markets after years of ignorance

Banks in “Wall Street” expect emerging markets to achieve better returns after years of poor returns, due to the major rise of US equities, which made emerging markets less attractive during that period. AQR Capital Management, Bank of America and Franklin Templeton are one of the institutions that bets that things eventually start to turn into the stock of developing markets. Michael Hartnett of Bank of America describes these markets as ‘the next emerging market’. AQR expects these markets to achieve annual returns of about 6% in the local currency during the five years until the next ten years, which bypasses US stock gain in dollars, which amounts to about 4%. Although S&B 500 has recovered over the past few weeks, the index was stable during the year until Friday closing, while an index equal to emerging markets increased by 10%. This increase hopes for a period that has extended about fifteen years of promises that have not been fulfilled, as the most important US index has risen by more than 400% compared to a poor progress of only 7% for the shares of developing countries. The weakness of the dollar and the escalation of Trump’s commercial war includes the reasons that investors lead to moving from the United States, the weakness of the US dollar and the fluctuations of the S&B index, and questions about the extent of the US treasury sustainability as a safe haven, in the light of the Equalation of the Eskalation. The fear of raising debt and deficit, which Moody’s urged Friday to reduce the United States credit rating increases the problems facing the continued superiority of the US market. Some investors who are looking for alternatives to the US market have gone to the Japanese yen, German bonds and the euro, but those ready to carry more risks, the velocity of liquidity rapidly rapidly from emerging markets and sometimes converts them into the United States that see the challenges affecting the markets. Warnings about the decline in the dollar and the end of US exceptional, Christie Tan, an expert in investment strategies at Franklin Templeton, which promotes developing effects of developing countries as alternative investment instruments for US treasury bonds: “The risk of a decrease in the value of the dollar is a warning to investors.” “We believe that the US exceptional era has ended.” The fall in the dollar for four months to April means that the profits in the local currency indicated to the ‘A QR’ increase when transferred to the US dollar. The currency index at the emerging markets of the company “MSCI” scored a record at the beginning of May, after the height of about 5% since the beginning of the year. “In the end, we have the required catalyst,” said Gitania Kandari, deputy head of the Department of Investment Department at Morgan Stanley. She added that she is more confident this time, based on historical averages, the dollar weakness can contribute through a third of the returns of emerging market shares. After its fund has failed to keep up with the US stock market over the past two years, the fund achieved a return of 17% this year and beat 97% of the competitive funds, according to the data raised by “Bloomberg”. Attractive internal sectors that are far from the fees have sought more in detail or in the in -depth investment opportunities in emerging markets, in the sectors of banks, electricity, health and defense dependent on local demand and thus be less vulnerable to the impact of high customs definitions. At AQR, CEO Chris Duhini addresses his attention to emerging market companies with small capital, which are expected to reach well in medium to long term. Financial flow to current investment funds listed in the United States invested by emerging markets, in addition to those aimed at certain countries, reached $ 1.84 billion during the week ended May 9, which is more than twice the amount registered in the previous week, according to the data collected by “Bloomberg”. The essential risks in the category of emerging assets are certain that fluctuations in markets, political turmoil and local crises are essential features of the assets category in emerging markets, and this year’s profits may face some obstacles. The growth of irregular profits among some developing countries compared to the United States and other advanced markets, as well as the cost of transactions, makes some investors hesitate to make decisions. قال مايكل بيكل بيلي ، مدير الأبحاث في “فلتون بريكفيلد برونيم Iorander” (Fulton Breakfield Broenniman): “من ن ح حية ، الناتج النا yet Esh ، إجف اتجج for المحلإج any فإجإجإanch اففف REgling mist sing الأسواertain الناشئ dial بوتيرة أسرع من الأسواighter امتقces. الحقيὀtr. نمatch نمو الأرباح المتكر “. “One of the long -term examples is China, where the economy is growing rapidly, but Chinese businesses often issue large amounts of shares, leading to disappointment in the growth of profits, compared to the United States and other developed countries out there.” He pointed out that “India represents an attractive emerging market, but the entry is difficult due to the high cost of transactions, and long -term returns were similar to the S&B 500 index.” So far, a United States transformation has not appeared in the emerging markets in the broader capital flow -data, while the increasing demand for European assets appears, according to Gabriella Santos, the largest market strategy for the US region in JP Morgan’s work division. The flexibility of monetary policy in emerging markets, but if the dollar is still weak, “the indirect impact of the decline in the green currency can be more attractive to foreign investors,” Santos. Compared to some important emerging markets, the United States seems to be limited to the ability to support the economy as its debt approaches $ 30 trillion. Countries such as India and the Philippines have quickly moved through severe interest rates, while the Federal Reserve is cautious with eliminating excessive monetary policy for fear of inflation. “The economic foundations in the most important emerging markets are strong, and are characterized by lower external debt and debt rates to the adequate GDP,” says Tan of Franklin Templeton, citing Turkey, Saudi Arabia, South Korea and several countries in Asia. “This low debt structure is a major attraction, especially compared to the United States.”