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.

China’s economy is less commodity-intensive than in the 2000s
(Image credit: 2016 Getty Images)

Financial markets are “getting ahead of themselves”, says Michael Mackenzie in the Financial Times. The ink had barely dried on the US-China trade deal (see here for more on that) before the bulls were pouring into emerging markets. Traders have noticed that the value of China’s renminbi has been “quietly” appreciating relative to the dollar. Stronger local currencies improve dollar-denominated returns. With US assets so expensive many are keen for a “prolonged rotation” towards emerging markets, which have “long been cheap”.

Yet “truces can be fragile”. Details of the deal could also prove a mixed blessing. Brazilian soy farmers, for example, are unlikely to be thrilled by Chinese plans to shift purchases of the foodstuff to the northern hemisphere. A key challenge for emerging countries this decade has been China’s economy, says The Economist.

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Markets editor

Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019. 

Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere. 

He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful. 

Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.