Developed & Emerging Market Outlook Feb 2022 | Ewpple

 

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Ewpple - Developed & Emerging Market Outlook Feb 2022

Developed Market Ex US

• Positive on Developed Market stocks (ex-US).
• The valuation of non-US DM stocks is attractive, and earnings have room to grow.
• This is due to the still easy monetary policy and significant exposure to the global economic recovery.
• The earnings revisions in Europe and Japan continue to be strong, but have yet to be reflected in equity prices.
• Japanese stocks have historically benefited from rising real rates.
• Past 1 year returns for VEA: +2.3%

Emerging Market Ex China

• Negative on Emerging Market stocks (ex China).
• Analysts like the non-China EM stock valuations, but are cautious about near-term challenges like less impressive earnings revisions, geo-political risks, vulnerabilities to inflation spikes & higher interest rates, and slower vaccine administration.
• Financial services are preferred. In most EM markets, Fintech, traditional banks, wealth management and insurance companies are relatively immature and offer structural growth opportunities with growing middle classes.
• The 'green energy transition' is another major topic, with opportunities for renewable energy, battery storage, etc.
• Past 1 year returns for VWO: -9.1%

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