Emerging Markets: Learn Why There's “Opportunity To The Upside”

Mark Galasiewski, the editor of the monthly Asian-Pacific Financial Forecast, sits down with ElliottWaveTV to give key insights about opportunities he sees now in emerging markets around the globe.

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[Editor's note: A text version of the interview is below.]

Alexandra Lienhard: I'm Alexandra Lienhard with ElliottWaveTV and today I've got Mark Galasiewski joining me. Mark is the editor of our monthly Asian-Pacific Financial Forecast. (New, August issue is live now – Ed.)

Mark, emerging markets are hot right now, and you're an expert in emerging markets so talk to us about what's going on.

Mark Galasiewski: One thing that we should know, first off, is that the MSCI Emerging Markets Index is outperforming the S&P 500 year-to-date in 2016. So that's one thing to be excited about in emerging markets. Another is the technical event that's happening. Emerging markets, or the MSCI Emerging Markets Index, spent about a year going sideways on a net basis. Just recently, in the past few weeks, it has broken out of a neckline pattern -- that is, the neckline of a Head and Shoulders bottoming pattern (also known as an inverse Head and Shoulders pattern). It's a very positive technical event. We think that there's a lot of opportunity on the upside, possibly over the next year. There are some particular markets, I would say India and Taiwan, that are worth looking at because they've been outperforming, just in the short-term.

Alexandra: And people don't realize that the MSCI is outperforming so talk to me more about specific markets.

Mark: Specific markets, right, I was saying India, Taiwan. There are opportunities, of course, in bonds -- if you want to go with Indonesia and India, you can get high single digits in bonds, but I think the stock market is definitely offering some of the best returns right now.

Alexandra: And what about Japan? I know that's a country and a market that you cover often. What's going on over there?

Mark: Right, Japan is also on the verge of a breakout. It's lagging EM a little bit, or at least lagging the MSCI Emerging Markets Index. We think that there's definitely going to be some upside in Japan over the next, certainly one, possibly two years and the interesting thing is that we've had 3 trends that have been in play in Japan. Parallel declines in the Dollar Yen, stocks -- the Nikkei and the Topix -- as well as in 10-year JGB yields. And we think that these declines have finally ended. 10-year JGB yields is just about to turn up, we believe it's ending. And stocks have already broken out – the Topix and the Nikkei have broken out of their downtrends for the past year, broken out of the trend channels that have bounded those downtrends. And we're still waiting for a similar breakout in Dollar Yen.

Alexandra: Thanks for taking a couple of minutes today Mark, I appreciate it. Your insight, as always, is great.

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