Blue-chip companies listed on the FTSE 100 have poured into China and other emerging markets in recent years in a bid to grab the exciting growth opportunities on offer. As the sentiment toward those regions sours, these companies’ shares are being hit.
Tim Cockerill, investment director at wealth managers Rowan Dartington, said: “The long-term drivers of growth, such as young and dynamic populations and high savings rates, are still in place [in emerging markets]. Nobody knows if the crisis will worsen, and markets have a habit of surprising us. You might see this as an opportunity to pick up quality stocks or funds at today’s lower prices.”
My opinion: I think I just need to make an emerging markets section since they seem to be the hot topic found between global monetary policy and stock prices. In the article linked above, the writer, Harvey Jones, does a very good job at pointing out which stocks are likely to take a hit because of the weakening currencies in many emerging markets. Weak currencies in these markets are a byproduct of the Federal Reserve taper along with China’s monetary policy tightening.
With a weaker than expected jobs report for the month of January and now a larger than expected reaction in emerging markets, I would not be surprised if Yellen decides to taper the taper after the next FOMC in March.