Analysts said that a rebound is ongoing on the emerging markets (EM) and that more opportunities could emerge in the near future. However, they warned that the EMs’ recovery trend remains quite uncertain and dependent to the Fed’s next choices. Shaky political circumstances plus poor growth and weak earnings could further complicate the macro-economic environment even if new political leaderships like acting President Michel Temer’s of Brazil look more business-friendly.
Although Brazil’s Ibovespa index jumped 23% so far this year as Dilma Rousseff’s impeachment was nearing, investment professionals believe that investing in equities is risky and that one should rather prefer local fixed-income assets. Also, investing in debt bonds could be the best way to put some EM into your portfolio as more pro-business measures are likely to be taken by Temer’s government, while keeping in mind that a stronger US dollar could force a quick change in plans throughout the year.