Contrarian Investors Consider Wading Into Emerging Markets But Risks Remain

Investors in emerging markets had their heads handed to them in 2018, losing roughly 18% of their value on the year. If that wasn’t bad enough, just days before the World Economic Forum was slated to begin in Davos, Switzerland, the International Monetary Fund released its World Economic Report for 2019 and 2020.  And, the forecast wasn’t great. Emerging Markets To Slow Before Regaining Steam. According to the IMF the bulk of the slowdown is expected in emerging Europe, where they suggest 2019 growth will fall to 0.70%. That compares to 2018 growth of nearly 4.0%. So, it’s a big drop to be sure. Nevertheless, the IMF also says that they expect growth in emerging Europe to rebound in 2020 to 2.4%. Okay, not great, but still in the plus column. Their forecast for emerging Asia, however, is a bit rosier.The IMF expects growth in emerging Asia to come in at 6.3% this year and 6.4% in 2020. And, while both numbers are lower than last year’s 6.5% advance, they still aren’t terrible. More importantly, investors with a long investment horizon might actually be well rewarded for allocating some portion of their portfolio to emerging markets right now. Investing in emerging markets in light of the just released IMF forecast might seem ill-timed. But, when considered in the context of investing like a contrarian, the move may make sense. Generally speaking, contrarian-like investing is taking a non-consensus view relating to a region, country.