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Emerging Markets Poised To Be Next Beneficiary Of Pandemic Bull Market: Bloomberg

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Emerging Markets Poised To Be Next Beneficiary Of Pandemic Bull Market: Bloomberg

Money is beginning to flow into emerging markets, as investors, flush from gravity-defying stock markets, look farther afield for opportunities, Bloomberg reports.

What Happened: Emerging markets are seeing greater foreign investor interest, while still having plenty of running room to go. 

Emerging-market bonds, stocks and currencies are showing strength heading into 2021. Fourth-quarter portfolio inflows to these markets are at an almost eight-year high, reports Bloomberg, citing data from the Institute of International Finance.

Nevertheless, "foreign positioning in bonds and equities for developing nations excluding China remains light," the article says, going on to quote Sameer Goel from Deutsche Bank AG, who calls this a "Goldilocks" moment for emerging markets.

They "have considerable cyclical catch-up potential," Goel said.

Goldman Sachs Group Inc (NYSE: GS), JPMorgan Chase & Co. (NYSE: JPM) and UBS Group AG (NYSE: UBS) each have given positive outlooks on emerging markets in recent weeks, Bloomberg reports.

Why It Matters: Investors have a few key variables in their view of the weeks or months ahead. November's record highs have people again wondering about the possibility of a major pullback in this volatile year. COVID-19 presents both hope and gloom, the former stemming from the speedy rollout of vaccines and the latter from the skyrocketing number of cases in the U.S.

But the view just beyond these near-term COVID jitters is one of high expectations as vaccines steadily reach people. Emerging markets could be poised for a buy-low/sell-high move either way.

ETF Action: The MSCI Emerging Markets Index is poised for a double-digit annual gain for a second consecutive year, as Benzinga noted earlier this week.

The iShares MSCI Emerging Markets ETF (NYSE: EEM), noted by CNBC's Carter Worth And Mike Khouw earlier this month, closed at $50.04, up 0.95%.

The Direxion Daily MSCI Emerging Markets Bull 3X Shares ETF (NYSE: EDC) closed at $83.06 on Friday, up 2.77%. (Note that this is a leveraged ETF, which comes with extra risk; veterans of the business advise that only experienced traders use them.)

 

 

 

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