Emerging Market Stocks Are Beaten Down. It Might Be Time to Buy.

Jan 24, 2022

Emerging Market Stocks Are Beaten Down. It Might Be Time to Buy.

Emerging market stocks have endured a difficult period. However, investors may wish to consider the group: the stocks appear to be reasonably priced and have just begun to show indications of life.

Overall, emerging market stocks have suffered large losses over the last 12 months. The iShares MSCI Emerging Markets exchange-traded fund (EEM) has fallen 12.4 percent over the last year, compared to the S&P 500's 15.3 percent gain.

Expectations of a significant slowdown in Chinese economic development have contributed to the drop in emerging market stocks. China's economy, the world's second largest, swiftly recovered from the epidemic, growing at an annual rate of 8.1 percent in 2021, according to FactSet. Economists now forecast a slowdown to 5.3 percent growth in 2022 and 5% growth in 2023 — well below China's pre-pandemic norm of 6% GDP growth.

This economic outlook, however, may alter if China's central bank takes steps to stimulate economic development. For example, the People's Bank of China reduced its one-year prime loan rate to 3.7 percent from 3.8 percent this week, while also lowering the five-year rate to 4.6 percent from 4.65 percent.

"EM is particularly appealing if China is compelled to be as stimulative as some have suggested," noted Dennis DeBusschere, founder of 22V Research.

This is a positive sign for emerging market stocks: According to FactSet, Chinese businesses account for over a third of the market capitalization of the iShares MSCI Emerging Markets ETF.

Earlier this week, HSBC analysts said that investors might "hunker down" in China and other developing markets, as many of these nations have already experienced monetary policy tightening, but the US and other developed countries are just getting started.

Another reason to invest in emerging market equities is their attractive pricing. The group is "quite inexpensive," according to Ned Davis, founder of Ned Davis Research.

The iShares ETF's aggregate multiple on next year's earnings-per-share prediction is 12.3 times. Nonetheless, its average earnings growth over the next two years is predicted to be nearly equal to that of the S&P 500, which trades at a premium of 20 times earnings — making the ETF's price appear inexpensive.

Emerging market equities may already have resumed their longer-term upward trend. The emerging markets ETF's share price has increased slightly more than 2% over the last several weeks and is currently within striking reach of its 50-day moving average of about $49.40. This indicates that investors are becoming more comfortable purchasing these equities. To be sure, the next critical milestone to monitor is the 52-week moving average of $52.

While emerging market equities are not yet out of the woods, things may be on the mend.

Subscribe Our Newsletter

Hong Kong Sets Stage For E-CNY Use, To Launch Pilot 'Soon After Spring Festival'
Hong Kong Sets Stage For E-CNY Use, To Launch Pilot ‘Soon After Spring Festival’

He did not provide a specific debut schedule, instead saying that it would start shortly after the Spring Festival. This season finishes on the 15th day of the Lunar New Year, which occurs on February 15, according to Chinese traditions.

Banks and Finance
Alibaba Stock Split Boosts Optimism Amid China's Economic Recovery

Tamta

Alibaba Stock Split Boosts Optimism Amid China’s Economic Recovery

Alibaba's stock split and China's economic recovery fuel optimism for the tech giant's future growth prospects.

Stocks
B2BROKER Liquidity B2BROKER Liquidity
Sponsored
Tamta

What Is A Bitcoin Stock-To-Flow Model? Beginner’s Guide
Bitcoin, the world’s leading cryptocurrency, has gained significant attention in the financial world in recent years, but its value can be highly volatile, making it challenging for investors to make informed decisions.

discover
Setting Up a Brokerage Based on MT5 White Label Model

Tamta

Building Your Business Based on MT5 White Label Platform

Many brokerages choose the MT5 white label solutions for quick and affordable market entry and a broader client base. Learn how to start your own one.

Forex Business
Contact us bg

Contact Us

Contact the Liquidity Provider
for any questions and advertising inquiriesb2broker

    Please fill out this contact form to get in touch with us

    / 3000

    By clicking “Get in touch” button, you agree to the privacy policy

    Successful!
    Thank you for your request.
    We will contact you shortly.
    Close

    Hazem

    MetaTrader vs cTrader: Which Trading Platform Shall You Choose?

    MetaTrader vs cTrader: The Full Breakdown

    Сonstantine

    Will Dogecoin Reach $1? Tokenomics and Price Analysis

    Will Dogecoin Reach 1 Dollar Analysis

    Сonstantine

    How to Get a Crypto Exchange License?

    How to Get Crypto Exchange License

    Сonstantine

    Best Crypto to Buy Now: Guide for Investors

    Best Crypto To Buy Now

    Hazem

    Grok vs ChatGPT: What’s the Best AI Assistant You Need in 2025

    Grok vs ChatGPT

    Сonstantine

    How to Choose the Right Liquidity Provider for Your Brokerage

    How to Choose the Right Liquidity Provider for Your Brokerage

    Сonstantine

    Low-Latency Trading Defined: Speed, Strategy and Technology

    Low-Latency Trading Explained

    Hazem

    How Liquidity Depth Affects Slippage in High-Volume Trading

    Liquidity depth and slippage in trading

    Hazem

    What is FIX API Liquidity Connection and How Does it Power Institutional Trading?

    FIX API in institutional trading

    Сonstantine

    OTC Trading Strategies and Technologies to Succeed in Over-the-Counter Markets

    OTC Trading Strategies

    Alexander

    What is OTC Trading? A Complete Guide for 2025

    what is OTC

    Alexander

    Synthetic Futures: A Trader’s Guide to Replicating Positions with Options

    How to Trade Synthetic Futures

    Сonstantine

    Order Book Depth: What It Is And Why It Matters?

    Order Book Depth What It is And Why It Matters

    Alexander

    Spot vs Perpetual Futures: Which Is Right for You?

    Spot vs Perpetual Futures explained

    Hazem

    5 Reasons Traders Are Switching to Perpetual Futures

    5 Reasons to Switch to Perpetual Futures

    Constantine

    Top 3 Liquidity Challenges Facing New Exchanges and How to Solve Them

    Top 3 Liquidity Challenges Facing New Exchanges Today

    Constantine

    Financial Planning in the Cryptocurrency Era — Master Crypto and Digital Asset Strategies

    Financial Planning in the Cryptocurrency Era

    Hazem

    Best Platforms to Trade Perpetual Futures in 2025

    Best platforms to trade perpetual futures in 2025

    Alex

    Top 10 Fintech Website Development Agencies for 2025

    Best Fintech Website Development Agencies for 2025

    Сonstantine

    Internal vs External Range Liquidity In ICT Trading Explained

    Internal vs External Range Liquidity In ICT Trading

    Constantine

    Portfolio Backtesting — Tools, Metrics, and Methods Explained

    Portfolio Backtesting

    Сonstantine

    ICT Trading Explained: Smart Money Concepts, Tools and Setups

    ICT Trading Explained

    Сonstantine

    CFD Trading Strategies: A Practical Guide to Risk and Execution

    CFD Trading Strategies

    Alexander

    What is a Fair Value Gap? A Guide to Trading Market Imbalances

    What is Fair Value Gap
    liquidity-provider-logo
    • News
      • Stock Market Forecast
      • Stocks
      • Banks and Finance
      • Companies
      • Crypto
      • Forex
      • AI
      • Technology
      • DeFi
      • NFT
    • Articles
      • Crypto Payments
      • Trading
      • Crypto Exchange Business
      • Forex Business
      • Fintech
      • Liquidity
      • FinTech Awards
      • Blockchain
      • Investing
      • NFT
      • DeFi
    • More
      • Videos
      • Liquidity Providers List
      • Crypto Payment Providers
      • White Label Brokerage Platforms
      • Broker CRM Platforms
    [email protected]

    © 2024 Liquidity Provider. All Rights Reserved

    Privacy Policy Cookie Policy
    This site is registered on wpml.org as a development site. Switch to a production site key to remove this banner.