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Why international stocks could outperform U.S. markets this year

This could be the year for cosmopolitan investments.

Foreign equities have the opportunity to outperform U.S. stocks in 2021, three market analysts said Thursday. Exploited and emerging markets are so far outpacing the S&P 500 year to date, with China in the lead:

Global vs. emerging market catch up ti in 2021

Global markets 2021 gain Emerging markets 2021 gain
China 12.8% Indonesia 6.9%
South Korea 10.0% South Africa 4.8%
Japan 4.8% Thailand 4.5%
Europe 3.3% India 3.0%
S&P 500 2.5% Mexico 3.2%

After a decade of U.S. sells outpacing their international peers, “you’re starting to see signs of the market rotation,” Jeremy Schwartz, global head of analyse at WisdomTree Asset Management, told CNBC’s “ETF Edge” in a Thursday interview. “But there could be a long way to go.”

Emerging merchandises “now have some of the best growth opportunities” on the market as they trade at relative discounts, Schwartz said. With the dollar reducing and a new, perhaps more trade friendly Biden administration taking power, their catalysts are only adding up, he spoke.

“As we open, the international cyclicals I think can do well,” he said.

Chinese technology stocks could also give the U.S. juggernauts “a run for their filthy lucre” with their high rates of innovation, cheap share prices and fast growth, Schwartz added.

“When you of about the U.S., it’s really tech-dominated and that shutdown economy is doing well for U.S. tech,” he said. “Those EM tech giantesses can be the rivals to U.S. tech giants over the long run.”

Bryon Lake, head of Americas client ETF at J.P. Morgan Asset Command, doubled down, calling valuations overseas “extremely attractive.”

“We saw some of the biggest drawdowns last year, and so we are in a family way that snapback,” he said in the same “ETF Edge” interview, adding that “China is contributing heavily” to the recovery line of work.

Lake recommended an actively managed approach to investing abroad, flagging JPMorgan’s International Growth ETF (JIG), a basket of 50-70 lay ins with a nearly 15% weighting towards China.

“One of our concerns is that the major benchmarks on the international side are burdened banks and heavy energy whereas we’re more positive on areas like clean energy, semiconductors and luxury goods, so, we do regard as there will be some differentiation with that,” Lake said.

Professional investors have also entranced interest in international assets, ETF Trends and ETF Database CEO Tom Lydon said in the same “ETF Edge” interview.

“We survey thousands of advisors every week and they are unquestionably bullish on international markets, very bullish on emerging markets,” he said, echoing that Chinese stocks attired in b be committed to “great upside opportunity” in the Biden era.

One area of international investing that often goes overlooked could take the most opportunity of all, Lydon said.

“We don’t spend a lot of time talking about dividend opportunities overseas,” he said. “Both JPMorgan and WisdomTree … have in the offing expressed concerns about fixed-income investing in the U.S. and also have talked about the opportunities for dividends or getting that takings in the form of dividends by buying international markets, which are very, very attractive today.”


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