From Investing.com: 2025-01-18 06:00:00

Emerging market stocks have lagged behind developed market peers for four consecutive years, with a 45% cumulative underperformance since 2019. Despite a September jump due to Chinese stimulus measures, the index has reversed gains. Analysts believe these stocks are undervalued and under-owned, with potential upside from Trump’s trade plans and possible aggressive stimulus from Beijing.

However, analysts caution against blindly buying emerging market stocks, citing uncertainty around Trump’s tariffs and the potential for Chinese stimulus. They predict Trump will focus on trade and geopolitics upon his return to the White House, possibly starting forcefully and dialing back later. Hopes for Chinese stimulus may be delayed pending clarity on Trump’s trade policies.

Given the uncertainties, analysts are maintaining an “underweight” position on emerging market stocks, advising investors to fade the bounce and stay underweight compared to developed market equities. “Fading” refers to an investment strategy that goes against prevailing market trends.



Read more at Investing.com: Here’s why JPMorgan says investors should stay underweight emerging market stocks By Investing.com