Emerging Markets: Escaping

While China struggled with a slowing economy and continuing trade spats, Emerging Markets as a whole did relatively well in Q4, although still producing a loss.

We don’t want to put too much of a positive spin on this, though, because EM was the laggard for the year.

In addition to being beaten down earlier in the year, another reason for EM's lower loss in Q4 was that thier currencies held their values against the U.S. dollar better than their developed country counterparts.

Other positives that lessened the pain in EM were:

  • China’s central bank cut reserve requirements hoping to boost lending. Her policymakers also said they would cut tax rates and continue to provide monetary stimulus in 2019.
  • Brazil elected a new conservative President who promised to stop government corruption, which has dogged the country for several administrations.
  • Turkey’s private sector agreed to drop prices by 10% in order to combat inflation.
  • Mexico, Canada, and the U.S. signed a new trade pact.

EM stocks are typically more volatile and have longer periods of under- or over-performing than its developed brethren.