With US interest rates rising, 2018 has been a hard year for Emerging Markets including South Africa. Investors have sought refuge in US equity markets which have offered attractive growth opportunities and access to the lucrative technology sector.
A big debate is whether this trend is likely to continue.
Saxo released a series of insights related to Emerging Markets to give their view on where they saw opportunities:
Quarterly Outlook Q4 2018: Emerging or submerging markets? By Steen Jakobsen
Emerging Market assets are trading at a deep discount, but a shift in growth leadership from the US to China could lead to a weaker US dollar, which would support commodities and EM again. Meanwhile the simmering Sino-US trade war heightens the risks for the global economy, and we are at a crossroads on several fronts: globalisation, geopolitics, and economics.
Quarterly Outlook Q4 2018: EM central banks to pay the Fed piper, by Kay Van-Petersen
Just as with global macroeconomic conditions, you can run from the Federal Reserve, but you cannot hide. So emerging market central banks have no choice but to pay the piper and follow the Fed, which is now tightening.