Since 2009 quality and growth companies have outperformed significantly. However, sentiment changed following the UK’s decision to leave the EU and the election of US President Donald Trump.
Towards the end of 2016, as a result of the US elections, emerging-market investor uncertainty increased. As we approach the end of the first quarter of 2017, it’s time to take a look at developments in emerging markets and what investors should bear in mind for the months to come.
External financing conditions in emerging economies remain highly volatile, as foreign investors repeatedly reassess the attractiveness of emerging market assets in light of ever-changing expectations about the path for interest rates in the U.S. and other advanced economies.
A congested political calendar this year, with elections in the Netherlands, France, Germany and possibly Italy in the next few months, together with renewed uncertainty over the Greek bailout programme and the UK's decision to leave the European Union, have led investors to pay increasing attention to political developments in Europe.
Investors believe that Republican tax proposals would be dollar positive. If that were to be the case, some obvious beneficiaries would be overseas earners in markets such as the Eurozone and Japan. However, the analysis is complex and we are not convinced that the dollar has much more upside.