PA ANALYSIS: EM argument growing despite Trump slump

Added 1st December 2016

One of the losers so far, from the election of Donald Trump to the White House has been emerging markets funds.

PA ANALYSIS: EM argument growing despite Trump slump

As my colleague, Tjibbe Hoekstra pointed out, according to figures from the Institute of International Finance, November saw foreign assets fly out of emerging markets assets at their fastest pace since the taper tantrum of 2013.

But, according to some emerging markets managers those initial outflows are beginning to subside as investors start differentiating between the rhetoric and the likely reality of what is to come in 2017.

That is not to say that there is a wall of money waiting to go into emerging markets or that a sharp swing toward protectionism by a Trump-led America is not one of the darker alleyways down which an EM investor could wander at present, but it does serve to reiterate that while investor knees have jerked there is actually very little clarity currently on what exactly is to come and as such there is perhaps no reason to follow that jerk with a run for the door.

Trump is also not the only risk facing emerging markets at the moment, nor according to delegates at Portfolio Adviser’s Emerging Markets event in London on Thursday, was it the most serious.

Asked what they believe the biggest risk currently facing emerging markets to be, by far the majority of respondents, 38.2%, said current Chinese debt levels.

"Should emerging markets successfully negotiate Trump’s presidency and, in particular, the first 60 days, the outlook is pretty good."

This was followed by a rising dollar, with 26.5% of the vote and then, in third place, with 14.7%, Trump-led US protectionism.

That said, while there are clear risks, 32.2% of the delegates surveyed were planning to increase their weighting to emerging markets equities, while 61.3% were planning to keep their holdings static.

There are arguably two primary reasons for this. The first is that there seems to be a consensus forming that, Trump’s trade policies might not be quite as extreme as they could be.


Overseas earners will be key amidst 2017 inflation

Sponsored by Neptune

Overseas earners will be key amidst 2017 inflation...

A by-product of sterling weakness is inflation, and we expect this to continue to gather steam over the coming months, with energy and food prices the hardest hit....

Kames Income Hub


Vincent McEntegart, manager of the Kames Diversified Monthly Income Fund, explains how he aims to deliver a stable and sustainable income of 5% p.a.*, paid monthly, by investing in a range of asset classes

Square Mile Research

AXA Distribution Fund
AXA Distribution Fund

Talking Factsheets is a video service for users...

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

Geoff Candy

Group digital editor

Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.



Investment Strategy




PA Alternative Ucits 2017 Congress
PA Alternative Ucits 2017 Congress

Tuesday 25 April
The Langham, London

PA Europe 2017
PA Europe 2017

Thursday 11 May
Furniture Makers' Hall

PA Channel Islands 2017
PA Channel Islands 2017

Wednesday 24 May
Royal Yacht Hotel, Jersey

PA UK Equity 2017
PA UK Equity 2017

Thursday 15 June
Radisson Blu Edwardian Bloomsbury Street Hotel

Sponsored Content

Investment Strategy