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.
South Korea’s market returns have been lackluster, primarily due to weaker corporate profitability as a result of competitive headwinds from corporate Japan and a strengthening won. We do not think South Korea will sit idly by and watch its competitiveness evaporate, and we are already seeing signs of government intervention, which could be just the beginning.
European markets are dominating headlines this year, from both an economic policy front, with Mario Draghi unleashing a fresh round of monetary stimulus, and a market performance perspective, with European bourses leading indexes higher and the euro tanking.