Emerging markets fillip rewards loyal investors
AFTER years in the doldrums, emerging markets roared back to form to become last year’s best performing asset class.
Emerging market stocks and shares returned an astonishing 26 per cent last year, with China leading the charge. Stocks in the Asia Pacific region also did well, returning around 25 per cent.
Emerging giants Brazil, Russia, India and China were flying high a decade ago, but the last five years have been tough. However, loyal investors have now been rewarded by a blistering performance over the last 12 months.
Tom Stevenson, investment director at fund manager Fidelity International, said 2017 saw global stock markets produce stellar returns with several indices hitting all-time highs, including the UK’s FTSE 100: “Despite fears of a global recession and geopolitical tensions with North Korea, 2017 was a vintage year for investors.”
European stock markets grew almost 17 per cent, while Japanese and UK markets rose more than 13 per cent, and the US around 11 per cent. However, it was a tough year for bond investments, with corporate, inflation-linked and government bonds all dipping slightly.
Investors should be careful about chasing past performance, but Stevenson said emerging markets and Asia should generate strong returns: “Longterm growth remains intact and valuations are reasonable.”
He also tipped Europe: “This is our favoured regional market thanks to a combination of good growth, a supportive central bank and reasonable valuations.”