When U.S. investors buy equities abroad, either directly or through a fund, they may not realize it but there are two potential sources of return—and risk—in that investment decision: the equities themselves and the currencies of the markets in which those equities are listed.
Recently, the emerging markets (EM) have been embattled in a storm of currency weakness and disappointing performance. However, that tide may be starting to turn.
March 31 marks the end of Japan’s fiscal year, making it a very important point from which to gauge how Japanese stocks are behaving and, ultimately, whether Abenomics is having any real impact.
South Korea is heavily dependent on exports—which account for over 50% of its gross domestic product (GDP)—to drive its economic growth. Since the country is so heavily dependent on exports, I feel it has a lot to benefit or lose from currency weakness or strength, respectively.