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By Patricia Ribeiro - First Quarter 2020
Emerging markets remain a very attractive asset class going into 2020. Valuations are in an attractive range and, in our view, provide interesting investment and compelling opportunities going into 2020. Here’s my take on the year ahead.
Growth expectations in 2020 are higher for emerging markets than developed markets, and we believe the valuations are also more attractive. If the U.S. Federal Reserve continues to bring rates down like they did in 2019, it can only help emerging markets. We think consumption and investments in this space should continue, which supports an environment for interesting investment opportunities. A big contributing factor is that inflation is tame across the board, with a couple of exceptions.
The lack of resolution in the US-China trade war continues to be a challenge for us—probably more from a sentiment point of view versus actual economic impact. We saw a lot of Chinese companies trying to manage their dependency on the U.S. in 2019 to mitigate the impact of the trade war. I think that is likely to continue into 2020.
The 2020 U.S. elections could also bring volatility to global markets generally. If there’s volatility in the U.S. market, we think it has the potential to trickle down to emerging markets as well.
News headline challenges are nothing new for emerging markets. That’s why we believe it’s so important to take a fundamental, long-term point of view.
The emerging markets asset class is made up of countries at different stages of their economic cycle. There are some emerging markets, such as Brazil, that are at an inflection point and they are starting to accelerate. Then there are others whose acceleration saw a bit of a setback because of the trade war with the United States. In the case of China, the government implemented enough policies to help the economy, which is why we see positive trends there.
Finally, there are other emerging economies where we are not seeing positive trends just yet. For example, India still needs to work out some structural issues with its economy.
Overall, we believe growth in emerging markets will remain strong in 2020, and we continue to find plenty of attractive opportunities in emerging markets going into 2020.
Get additional insights from our CIOs in the latest Investment Outlook.
Will global small-cap stocks play catch up to large-cap stocks in 2020? Get the latest outlook from Portfolio Manager Trevor Gurwich.
First Quarter 2020
Liquidity, volatility and credit spreads may all have a role to play in the year ahead, according to Head of Investment Solutions Cleo Chang.
Emerging markets face a tough year ahead with the status of the U.S.-China trade war and the U.S. presidential election still up in the air.
2018 hasn't been kind to emerging markets. Sr. Portfolio Manager Patricia Ribeiro believes fears of contagion, which never materialized, caused the recent volatility. Read why she's still encouraged by opportunities.
October 29, 2018
2018 may have been difficult for emerging markets, but Sr. Portfolio Manager Patricia Ribeiro has three reasons to look forward to a better 2019.
January 8, 2019
The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
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