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Market Update

A Journey through Emerging Markets' Ups and Downs

Using Morningstar's indexes as platforms, we explore the cyclicality of emerging-markets stock returns over the past decade.

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The recent sell-off in emerging markets has interrupted what had been a nice rebound in 2016. The Morningstar Emerging Markets Index has shed 6% for the one-month ended Nov. 21 (in USD terms). Investors have been selling emerging-markets assets in the wake of sliding local-market currencies and increased fears of trade protectionism under U.S. President-elect Donald Trump. Nonetheless, the index has made strong gains this year; it is up 8.9% for the year to date. 

By contrast, the Morningstar Developed Market Index USD has gained just 5.2%. Judging from the Global Market Barometer heat map, Western Europe and Japan have weighed on developed-market returns. Emerging markets across Asia and Latin America have been volatile in recent weeks. But Latin American markets have posted strong gains this year, along with Russia and South Africa.

Dan Lefkovitz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.