Is EM Washed Out?
Are emerging markets (EM) washed out? Last week the MSCI Emerging Markets Index officially sank 20% from its peak in late January. This prompted many bearish headlines, such as “Emerging Markets Slide into Bear Market amid Contagion Concern,” and “It’s Beginning to Look a Lot Like a Crisis.” At the same time, a recent survey from Bank of American/Merrill Lynch showed that global fund managers are underweight EM equities for the first time in more than a year. One thing is for sure: From a contrarian point of view, the level of pessimism we are seeing toward EM could potentially be a bullish sign.
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