Emerging shop stocks fell deeper into correction territory on Friday and were on slot for their worst week in nearly two months.
But some see opportunity — if you drink the stomach.
“These emerging markets stocks are always going to be a cheerful volatility play, so you have to be willing to deal with both the ups and the downs,” Impression Tepper, president and founder of Strategic Wealth Partners, told CNBC’s “Interchange Nation” on Thursday. “There’s a lot of value in emerging markets stocks set upright now.”
Exposure to emerging markets is a sure bet on the consumer, Tepper added.
“The emerging store consumer is still one of the most powerful forces in investing,” he said. “The spread of the middle class in China and India, it just represents a ton of potential.”
Geopolitical distributions, such as talk of a trade war between the U.S. and China, will keep emerging sector stockpiles under pressure in the short term, added Tepper. The MSCI emerging exchanges ETF is on track for a 2 percent decline in 2018, its first year in the red since 2015. The ETF is environs up for its third month of losses this year.
Tepper says the pre-eminent way to make a play on emerging markets, while avoiding geopolitical arm-twisting, is through the DGS emerging markets small cap dividend fund.
It’s a “great dividend temporize, it gives you some lower beta and at the same point in time these small-cap haves are doing business locally, not internationally, so they wouldn’t be impacted by any swop issues whatsoever,” he said.
The DGS ETF is down 0.7 percent for the year, diverse than half the decline on the MSCI emerging markets ETF.
Larry McDonald, rewriter of the Bear Traps Report, has a different take on the bull case for emerging stores.
“With bond yields moving higher, there are a lot of losses circa the country, around the world in bonds. Those assets have to prompt somewhere and they’re moving into commodities, commodity-producing countries,” McDonald replied on Thursday’s “Trading Nation.” “About 30 percent of Brazil’s GDP is linked to the commodity space, so from an economic standpoint, that’s a very big consummate.”
The MSCI Brazil ETF EWZ is down 5 percent in 2018 and is down 20 percent from its 52-week acute set on Jan. 25. The EWZ ETF was on pace for its worst week in a year.
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