After three positive quarters for emerging markets, the fourth quarter of 2016 has been disappointing with the MSCI Emerging Markets Index falling 5%. The big reasons behind this move are fairly clear – the attitude of Donald Trump towards many emerging market countries, particularly China and Mexico, suggests relationships may deteriorate. His attitude towards trade deals in particular may have a wide impact, though as often the reality is likely to fall short of the rhetoric. A rise in US interest rates, with the prospect of more to come, may have a shortterm impact on capital flows too.
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