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Fabiana Fedeli

Signs of stabilization in emerging markets

10-05-2016 | Insight | Fabiana Fedeli Last year was a perfect storm for Emerging Markets: concerns about China amid slowing growth, volatile domestic equity markets and the removal of the currency peg to the US dollar, along with weak commodity prices, the Fed hike and its impact on local currency depreciation all took their toll. The result was the largest outflow from emerging equity markets since 2008. All countries of the MSCI Emerging Markets index, with the exception of Hungary and Russia, underperformed Developed Markets in 2015.

The good news is that much of the storm seems to have passed, and we are seeing some signs of stabilization. Emerging Market currencies have stopped their slide versus the US dollar. In China, capital outflows have eased, and so has currency pressure on the yuan. Trade flows appear to have bottomed out, and the net profit margin gap between emerging and developed markets has stabilized. Subsequently, Emerging Market equities flows are showing improvements.
 
For a full appraisal of how the Robeco Emerging Markets Equities team now views the asset class, go here.

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