A look at Emerging markets conditions


9 October, AtoZForex.com, Lagos – In the second half of 2015, China has been one of the major market moving subjects across global markets. After the devaluation of the Yuan back in August, things seem to have stabilized a bit. And Andres Garcia-Amaya believes that there is one reason to now be bullish on China, which is “Real estate”.

China’s real estate

The problems for the nation started with the collapse of the real estate. Which is the same reason that makes the country look attractive again. According to Andres Garcia-Amaya, J.P. Morgan Asset Management’s emerging market analyst said:

“China’s real estate is starting to find a bottom. If you remember, the whole bear case for China was this collapse in real estate. They’ve had three months in a row of upticks in prices,

“If you continue to see that, the bears are going to have less legs to stand on,” he said.

Oil contagion hit Brazil 

The slowdown in the global economy is also well reflected in the economies of countries like Brazil, which are highly dependent on commodity exports. Brazil for example is regarded as a high-growth economy that has been deeply affected to the negative by low oil and iron ore prices. The emerging markets slowdown is not becoming a contagion on the U.S economy.

Russian recovery

Another emerging market on the radar is Russia. Following the downturn of the country’s economic activities on the back of western sanctions and the fall in oil prices, Russia has suffered huge down turn. This seems to be changing as the Russia is up year to date. Garcia-Amaya commented that:

“Russia actually our biggest overweight,” he said. “It’s one of the few markets that is up year to date and … with all the issues it has, it’s still trading at 4 1/2 times price-to earnings the yield is 5 percent. You rarely see something in which the P/E is lower than the dividend yield.”

“So either Russia’s going bust, or there’s a lot more upside and we think there’s a lot more upside,” Garcia-Amaya added.

Emerging markets remain a key focus as the US Fed has clarified that external conditions remain a major concern affecting the rate hike decision.

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