Trustnet Magazine Issue 10 September 2015 | Page 18
INVESTMENT STRATEGY
EMERGING MARKETS
EMERGENCY
Emerging markets have ended a woeful couple of years with an all-out
crash – Adam Lewis looks at whether you should cut your losses or use
the correction as a buying opportunity
I
f there was ever a moment
to be focusing on the case
for emerging markets, the
recent falls in China and the
accompanying spike in global
volatility that followed would
suggest that time is now.
China has dominated the
financial headlines in recent
weeks. The government’s decision
to revalue the currency, combined
with the release of data showing
that the economy is growing
at its slowest rate since 1990,
sent global markets in a spin
triggering what has now been
termed “Black Monday”.
THINKING LONG TERM
Predictably, stock markets outside
of China have quickly bounced
back, but the events illustrate the
challenges of investing in emerging
markets. Having peaked in June,
China’s Shanghai index is down 30
per cent over the past three months.
However, rather than trying to seek
solace in news stories such as the
People’s Bank of China’s decision to
raise interest rates, when it comes to
investing in emerging markets the
key is to think longer-term.
Amaya Assan, a senior investment
research analyst at Square Mile
Research, says emerging markets
PERFORMANCE OF INDEX OVER 3 MONTHS
20%
Shanghai Stock Exchange
10%
0%
-10%
-20%
-30%
31
21
13
05 Aug
28
20
10
02 Jul
24
16
08 Jun
29 May
-40%
Source: FE Analytics
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