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Research Report

Don't jump on the emerging markets bandwagon just yet Add to ...

Globe editors have posted this research report with permission of Stocktrends. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:

Emerging market stocks are earning back investor confidence. Considering the muted volatility of the broad North American stock market, evidence of a blooming sector rotation to overseas equity risk is a welcome technical signal for investors. In U.S. dollar terms, Brazilian equities are outperforming U.S. equities by 13 per cent since the end of January. Southeast Asian markets - Indonesia, Thailand, and Philippines in particular - are also setting a much better pace than U.S. stocks.

But should investors be jumping on these stocks now? Timing is everything for active traders, but is now the time for investors with a longer trade horizon? Even the impressive spring rally that has propelled Brazilian stocks is not convincing enough when measured against the backdrop of a bearish long-term trend. The markers of more promising return expectations in the immediate future are not yet in place. For more conservative investors there is no need to jump on these risky markets yet.

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