Emerging market stocks are continuing their rally they’ve been on a run since January, surging around 15 percent this year. The stocks started to taper off after investors got a little skittish over concerns about a possible hike in U.S. interest rates, but Fed Chairman Janet Yellen made it clear she remains cautious about such moves. So the cash is still pouring in.
After looking like a train wreck in January, Asian markets appear back on track as investors have been bargain hunting in Asia—reassured by signs of stability in Chinese markets.
Overseas investors snapped up more than 2.6 billion dollars in regional stocks this month.
The MSCI emerging markets index has surged more than six percent <[6.2%]>in March, and has outperformed developed markets for the year to date.
A big surge came through U.S. exchange traded funds. Last week, they channeled around $1.45 billion into emerging markets stocks and bonds.
Chinese Mainland and Hong Kong funds raked in 232 million U.S. dollars—more than double the 98 million invested the previous week.
With the Fed sounding less enthusiastic about its pledge to raise rates from near zero to around one percent in 2016, foreign investors have been snapping up Asian equities. The rebound has lasted six weeks so far—the longest winning streak since last May. The question many investors are asking now is how long can the good times last?
The Managing Director and head of research at BOCOM International warns there could be turbulence ahead.
Fidelity – a global investment company with over $2 trillion dollars under management – expects any volatility to be relatively short term.
While a lot of investors remain bearish on China, some big players are betting otherwise. Last month, the world’s largest emerging markets fund – Vanguard’s $46 billion Emerging Markets Stock Index Fund – doubled down on China—boosting its China holdings to 30 percent…from 26 percent last year.
And Goldman Sachs says it expects China’s blue-chip stock index, the CSI 300, to climb as much as 34 percent this year.
