Advertisement

It's not been all bad news for emerging markets

Emerging markets have had a tough year. Still, as investment guru Jeffrey Gundlach notes, they've still outperformed global indices.

926-Gundlach-634
Jeffrey Gundlach, founderand chief investment officer, DoubleLine Capital

Want to know where to invest for the next seven to 20 years? Buy emerging market equities, says DoubleLine's Jeffrey Gundlach. It's been a grim year for most asset classes including emerging markets yet overall they have managed to outperform global indices, notes Gundlach.

On top of that, as measured by the cyclically-adjusted price/earnings ratio (CAPE which looks at earnings in the context of the long-term economic cycle), emerging markets are trading at less than half the valuation of US stocks. Based on that alone, says Zero Hedge, Gundlach reckons that emerging markets "could outperform US stocks by 100%". But just remember this is long term, so you'll need to be patient.

Advertisement - Article continues below

Gundlach is not bullish on the short term by any means. Europe's economic growth is "absolutely horrible", while export-sensitive markets such as South Korea are being hit particularly hard. He also notes that 75% to 80% of global markets are in a "death cross" pattern, which is an unpromising (if imperfect) technical indicator. "It is quite possible there will be a global recession," he says.

Even the US, where growth has remained far healthier than elsewhere, with few signs of slowing growth outside the housebuilding and buying sectors, is not immune. At the start of 2018, Gundlach forecast that the S&P 500 would end the year with a loss, a call that now looks likely to prove correct.

Advertisement
Advertisement

Recommended

Bullish investors return to emerging markets
Stockmarkets

Bullish investors return to emerging markets

The ink had barely dried on the US-China trade deal before the bulls began pouring into emerging markets.
27 Jan 2020
Beware the hidden risks when investing in emerging markets
Investment strategy

Beware the hidden risks when investing in emerging markets

Emerging markets look cheap compared with developed countries, but earnings may be less trustworthy.
23 Dec 2019
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Emerging markets: buy when the news is bad
Emerging markets

Emerging markets: buy when the news is bad

Emerging markets are being squeezed by local turmoil and by more general factors. But bad news can spell opportunity for investors.
5 Nov 2019

Most Popular

Eagle Lightweight GT: the reincarnation of the E-type Jag
Toys and gadgets

Eagle Lightweight GT: the reincarnation of the E-type Jag

Jaguar’s classic E-type sports car has been reinvented for the modern age. The result – the Eagle Lightweight GT – is a thing of beauty.
7 Aug 2020
Gold and silver have taken a vicious beating – is the bull market over already?
Gold

Gold and silver have taken a vicious beating – is the bull market over already?

The gold price has tumbled recently, leaving traders nursing losses – just a nasty correction or has the gold bull market run out of steam? Dominic Fr…
12 Aug 2020
Should you take advantage of the UK’s new breed of domestic holidaymakers?
Buy to let

Should you take advantage of the UK’s new breed of domestic holidaymakers?

With Britons choosing to holiday in the UK this year, the owners of the country’s holiday cottages are cleaning up. Should you buy in, too? Merryn? So…
10 Aug 2020