Emerging Markets Fight Through Volatility and Headlines

2019 Midyear Insights

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By Patricia Ribeiro - July 10, 2019

In my last update in April, I had my fingers crossed that we would soon see a truce in the U.S.-China trade war. But in May, another round of tariffs on goods from China and new threats against Mexico, followed by promises of retaliation, roiled global equity markets. We ended June back where we started—with cautious optimism that a truce was in the offing. However, a key takeaway from this experience should be that predicting the exact timing of a trade agreement can be a losing proposition.

Our policy has always been to manage the portfolio on a company-by-company basis and let macro events play out. Furthermore, we find that companies operating in emerging markets are accustomed to volatility, and we look for sharp management teams adept at making adjustments. In fact, earnings reports show that there are companies growing even amid the headlines, which the markets are beginning to recognize.

Although it remains unclear how these disputes will be resolved, trade is just one of many factors impacting emerging economies. For more insight on sorting out the winners and losers, click on my video below.


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