Thursday , May 25 2017
Home / The Capital Spectator / Emerging-Markets Stocks Rise To 2-Year High

Emerging-Markets Stocks Rise To 2-Year High

Summary:
Equities in emerging markets advanced last week, posting the best performance among the major asset classes and touching a two-year high, based on a set of exchange-traded products. Vanguard FTSE Emerging Markets (VWO) increased 1.8% over the five trading days through May 12 – the best weekly increase in two months for the fund. The strong gain is substantially ahead of last week’s second-best performer: broadly defined commodities via iPath Bloomberg Commodity (DJP), which popped 1.0% last week. Relatively inexpensive valuations in emerging markets is part of the allure, according to Barron’s. “At just 12 times forward earnings, emerging markets are trading at a hefty discount to US stocks, at 18 times, European shares, at 15, and Japanese equities, at 14,” the publication advises.

Topics:
James Picerno considers the following as important: , , , , ,

This could be interesting, too:

James Picerno writes Housing’s Weak Start For Q2 Is Probably Noise

James Picerno writes Another Rate Hike Approaches As The Yield Curve Flattens

Gregor Samsa writes God Bless Our British Brothers and Sisters

Gregor Samsa writes The Fed’s Overnight Reverse Repurchase Agreements

Equities in emerging markets advanced last week, posting the best performance among the major asset classes and touching a two-year high, based on a set of exchange-traded products.

Vanguard FTSE Emerging Markets (VWO) increased 1.8% over the five trading days through May 12 – the best weekly increase in two months for the fund. The strong gain is substantially ahead of last week’s second-best performer: broadly defined commodities via iPath Bloomberg Commodity (DJP), which popped 1.0% last week.

Relatively inexpensive valuations in emerging markets is part of the allure, according to Barron’s. “At just 12 times forward earnings, emerging markets are trading at a hefty discount to US stocks, at 18 times, European shares, at 15, and Japanese equities, at 14,” the publication advises.

The long-term expected risk premium for equities in emerging markets was recently estimated at an annualized 9.3%, the second-highest forecast among the major asset classes.

The biggest loser among the major asset classes in the second week of trading for May: US real estate investment trusts (REITs). Vanguard REIT (VNQ) declined 1.4%, marking the third straight weekly loss for the fund.

The Global Markets Index (GMI.F) suffered a setback last week, in part due to softer US equity prices for the second week of May. GMI.F, an investable, unmanaged benchmark that holds all the major asset classes in market-value weights, eased 0.2%, the first weekly decline in a month for the benchmark.

Emerging-Markets Stocks Rise To 2-Year High

In the one-year column, emerging-markets stocks continue to hold the top spot. VWO is currently posting a strong 25.5% total return for the past 12 months. The gain is comfortably ahead of the number-two performer: US equities via Vanguard Total Stock Market ETF (VTI), which is up 18.9% for the trailing one-year change.

The biggest loser for one-year performance: foreign government bonds in developed markets. SPDR Bloomberg Barclays International Treasury Bond (BWX) has been rebounding this year, but the modest rally has yet to lift the ETF out of its one-year hole. At last week’s close, BWX was down 4.0% for the trailing one-year window.

Meanwhile, GMI.F is still posting a solid one-year increase. The benchmark is ahead by 11.2% for the year through May 12.

Emerging-Markets Stocks Rise To 2-Year High


James Picerno
James Picerno is a financial journalist who has been writing about finance and investment theory for more than twenty years. He writes for trade magazines read by financial professionals and financial advisers. Over the years, he’s written for the Wall Street Journal, Barron’s, Bloomberg Markets, Mutual Funds, Modern Maturity, Investment Advisor, Reuters, and his popular finance blog, The CapitalSpectator.

Leave a Reply

Your email address will not be published. Required fields are marked *