5 Great Emerging Market Picks For 2017

U.S. markets have had a great 2016, clocking up considerable gains following a rally induced by Donald Trump’s surprise electoral victory. Even though the year ended with profit taking, stocks have been on a roll, achieving new landmarks with unfailing regularity and flirting with others which still seem eminently achievable.

Since the performance of other markets has paled in comparison, investors have naturally opted to focus their attention on domestic stocks. The outlook for the current year is equally bright, though a minority of naysayers continues to issue warnings. Given the extent of recent gains, it makes sense to diversify into emerging market securities in order to protect your profits. Stocks from Brazil, Chile, Mexico and South Africa are particularly good choices.

Brazil, Chile Have Room to Recover

In Oct 2016, Chile’s economy contracted for the first time in seven years. The decline was primarily attributed to a fall in mining and manufacturing activity. However, this is likely to urge the country’s central bank to reduce interest rates in order to induce growth. Moreover, Chile’s stocks will gain from the increase in prices of copper and expectations of business friendly policies post this year’s presidential election.

Brazil’s prospects seem somewhat bleaker at first glance. The country’s economy is widely expected to contract over the year. However, the slack in demand could lead to a correspondingly lower rate of inflation which would result in a fall in interest rates, which in turn would spur investment.

Moreover, the country’s benchmark index, the Ibovespa, has notched up significant gains following Dilma Rouseff’s impeachment, as has the Real. Additionally, a stronger U.S. economy could lead to higher demand for the country’s products this year.

Mexico, South Africa Remain Strong

South Africa is currently suffering from sluggish growth which itself is believed to be due to a lack of confidence in President Jacob Zuma. However, several analysts and market watchers believe that South Africa’s president may soon have to make way for new leadership. Zuma has recently staved off calls from within this party to step down, but only narrowly. This has increased the allure of the country’s securities and experts increasingly believe that the country will not have to suffer a debt downgrade.

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