+27 71 448 3496
leon@whyafrica.co.za

Why investors should be considering emerging markets now

Share Article
Investors should start looking at emerging markets again. Image credit: Leon Louw

Why investors should be considering emerging markets now

While the timing of the US Federal Reserve’s highly anticipated pivot on rates remains uncertain, astute investors should already be considering redirecting their attention towards emerging markets, says a leading international financial CEO and analyst.

The comments from Nigel Green, the CEO and founder of deVere Group, one of the world’s largest independent financial advisory and asset management organisations, comes as Wall Street’s S&P 500 index reached a record high on Friday on the back of market sentiment that the US Federal Reserve is poised to start cutting rates.

Investors should be eying opportunities in emerging markets

“Although we believe the markets are getting ahead of themselves with the idea that the Fed will imminently start cutting rates, the US central bank is likely to pivot at some point this year,” says deVere.

“With this in mind, investors should now be looking ahead and eyeing opportunities in emerging markets.”

“A dovish Federal Reserve typically results in a weaker US dollar. As the dollar depreciates, it enhances the attractiveness of emerging market assets,” he adds.

“Countries with high-yielding currencies and robust economic fundamentals become appealing destinations for investors seeking returns beyond what mature markets can offer.

“This currency play is often a significant driver of returns for those strategically positioned in emerging market assets.”

Liquidity injection into global markets

Another important point is that historically, when the Fed adopts a more accommodative stance, it tends to inject liquidity into global financial markets.

“This surge in liquidity can be expected to find its way to emerging markets, creating an environment conducive to investment and economic growth,” notes Nigel Green.

In addition, the prospect of lower interest rates in the US encourages a search for yield among global investors.

“In a lower-interest-rate environment, emerging markets often stand out as havens for higher returns. These markets frequently offer more attractive yields on equities and fixed-income securities compared to their counterparts in developed economies.”

Should the Fed signal a potential shift in monetary policy, global investors should also consider the relative valuations in emerging markets. Many of these markets exhibit “more attractive price-to-earnings ratios and other valuation metrics” compared to their developed counterparts.

Diversification another key factor  

The asymmetry in valuations presents an opportunity for investors to “capitalise on potential upside” in an environment where mature markets might be more fully priced.

Diversification is another key factor driving the case for increased exposure to emerging markets. Emerging markets, with their diverse economies and industries, provide an effective means of achieving this diversification, potentially mitigating risks associated with concentration in any single market.

“While markets may be prematurely pumped in anticipation of the Fed’s pivot, the rationale for global investors to now explore opportunities for portfolio growth and resilience by considering exposure to emerging markets is robust,” Green concludes.

Why investors should be considering emerging markets now

WhyAfrica provides on the ground information and business intelligence about the sustainable utilisation and extraction of natural resources in Africa, and can assist your company through:  

  1. Membership:
  • WhyAfrica’s membership offers great business insights to you, your company, and clients.
  • Amongst many other benefits, we will publish editorial content about you or your company on the WhyAfrica online platform and on all WhyAfrica’s social media pages – the annual fee is R6,500 and you can find out more or subscribe here: https://www.whyafrica.co.za/product/membership/
  1. Sponsorship:
  • WhyAfrica’s Road Trip takes place annually in July and August. During our Road Trip we aim to visit more than 30 project sites. Sponsoring the Road Trip, or to be a WhyAfrica member, gives you unparalleled insight into the business environment of the countries that we travel to and the project sites we visit.
  • To be a member or sponsor allows you access to invaluable, on the ground, business intelligence and a great marketing opportunity for all companies doing business in Africa.
  • The main aim of our Road Trips is to promote Africa as an investment destination and to showcase Africa’s greatest companies, and projects to our large global audience, which includes a list of potential investors, venture capitalists and serial entrepreneurs.
  • To view the photos of this year’s Southern Africa Road Trip click on the gallery link or follow our Instagram account at why.africa https://www.whyafrica.co.za/road-trips/whyafrica-road-trips/.
  1. Advertising:
  • We publish daily online articles on our WhyAfrica platform and post them on social media every day. Our combined online reach is more than 45,000. In-article banner ads are highly successful advertising tools as is advertising space on our website.
  • In addition to our bi-weekly newsletters, we publish two printed- and two interactive digital magazines per year. The printed magazines are distributed at major events and conferences throughout the year, and also on our WhyAfrica Road trips.
  • Digital magazines are e-mailed to all our subscribers and shared on our social media platforms. A copy of the latest edition is automatically attached to all our outgoing e-mails.
  • WhyAfrica magazines provide great marketing opportunities. There are also in-article and on-line advertising opportunities at exceptional rates. Contact me for more information on leon@whyafrica.co.za or give me a call.
  • To subscribe to WhyAfrica’s free newsletters and magazines click on the link and register: https://www.whyafrica.co.za/subscribe/  
    1. 4. Partnerships
    • Maximise your African exposure and link with our large business network through becoming one of only 10 WhyAfrica partners. We have only five prime partnership positions left for 2023, so contact me at leon@whyafrica.co.za to get the best deal.

 

 

 

Share Article

Sectors

AgricultureEnvironmental Management & Climate ChangeEnergyESGInfrastructureMiningPolitical EconomyTourism and ConservationWater Management