Emerging markets have rallied. will it last_ – apr. 15, 2016

One key stock index for emerging markets, the MSCI, is up 6.5% this year. Msci world materials index That’s far better that European markets and ahead of the recent turnaround in U.S. Msci world price index markets. Msci full name Mexico, Brazil and South Africa’s markets are up so far this year. Msci ipd Last year they were all down by double digits.

“The recent recovery after a miserable six months largely reflects a pickup of global risk appetite as concerns about the global economy have receded,” says Charles Collyns, chief economist at the Institute of International Finance.

Many developing countries, such as Brazil and South Africa, depend on demand from China for their economies to grow. Msci world index bloomberg ticker Since 2011, China’s economy has been slowing down, hurting growth prospects in developing countries.


Crashing commodity prices and concerns about higher interest rates have exacerbated the flight of cash out of emerging markets in recent years. Msci us index Investors pulled $750 billion out of emerging markets last year, according to the Institute of International Finance.

1. Eafe msci Prices for commodities like oil, iron and soy have stopped falling and have actually risen a lot. Msci world tobacco index Oil prices are up 54% since hitting a low on February 11. Msci world performance Iron and copper prices are up this year too. Msci world index data This is great news for emerging markets, many of which depend on commodities to drive growth.

3. Msci eafe value index Interest rates aren’t rising as expected. Msci global index That eases the pressure on developing countries, some of which have to pay off their debt in higher value U.S. Msci world sri dollars or euros.

4. Msci world etf The U.S. Msci world healthcare index dollar rallied a lot against several currencies in emerging markets last year. Msci stock quote In fact, now some those currencies are gaining value against the dollar in 2016.

5. Msci world index history Another key reason is value. Msci definition Emerging market stocks are cheaper than U.S. Msci world sector weights stocks. Msci index china One key measure of value, the price-to-earnings ratio, is about 11.6 for the MSCI EM index. Msci wiki But the S&P 500 is trading at about 17.5 times forward earnings.

Concerns still loom about China’s slowdown and the comeback in commodities is no sure thing. Msci world index chart For example, leaders of the oil cartel OPEC are meeting this weekend to discuss oil production. Msci world nr If no concrete agreement comes out of the meeting in Doha, that could claw back some of the gains in oil prices.

Plus, the Federal Reserve still plans to raise interest rates this year, albeit more slowly than originally believed. Msci emerging markets index constituents Higher rates usually make it more expensive for developing countries and companies to pay back debt that must be paid in dollars.

“We suspect that financial markets in the emerging world will continue to perform well,” say John Higgins, chief markets economist at Capital Economics, a research firm.