Kiplinger’s Personal: Don’t Give Up on Developing Markets (Kiplinger’s Personal Finance)

  • China is by far the largest emerging market, representing about one-third of the Emerging Market Index. But its economy is suffering self-harm: a severe response to the COVID pandemic and a crackdown on technology companies, which are seen as a threat to the notion of “common prosperity.” Also, the United States is intent on eliminating China from supply chains. I recommend that investors go light on Chinese shares or buy funds such as iShares MSCI Emerging Markets ex China, an ETF that owns no Chinese stocks at all.
  • India is the biggest and the best of the emerging markets, and banks with broad retail and commercial diversification provide an easy way to invest in the entire domestic economy. Among them: HDFC and ICICI. HDFC’s shares are up by about a third over the past five years; ICICI’s have more than doubled. Brazil is the largest South American market, and although it suffers from political volatility, it has strong companies worth considering. I prefer firms that target the domestic market, including banks Bradesco and Itau Unibanco; BrasilAgro, whose businesses are rural real estate and farming; and Companhia Brasileira de Distribuição, a retailer that sells food, clothing, electronics and gasoline.
  • The current slump may last for years, so you need a long perspective. But putting up to 10% of your assets in a mix of developing-country stocks and funds today could give your portfolio a boost in the decade ahead. READ MORE

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