Since the Great Recession in 2009 emerging market stocks have grossly underperformed US stock markets. The large emerging markets stock markets also known as BRICS such as Brazil, Russia, India, China and South Africa have exhibited the same trend lagging severely US stock markets who were mainly driven largely by the meteoric rise of the big Five global technology companies like Apple, Microsoft, Amazon, Google and Facebook.
The main reason for the underperformance of the stock markets of Brazil, Russia, India and China was the fact that the hot money flows have been chasing both public and nonpublic technology companies mainly in the United States. Money flows have largely retracted from Brazil, Russia, India and China.
When will the big money return and the stocks of Brazil, Russia, India and China become growth stocks again?
Short answer - after the pending crash of information technology companies listed on US stock exchanges and their US private counterparts. Yes, the global technology bubble bandwagon could run for one or two years, but it will soon hit a valuation or bubble wall. Fear will soon triumph over greed and the Dow Jones Industrial Average and the Standard and Poor's 500 will fall by circa 30% while the Nasdaq composite will fall by 40% or even more.
After the looming stock market crash, which will also affect Brazil, Russia, India and China, the hot money flows will start searching for new harbor. The most valuable one it terms of valuation metrics will be the large stock markets of Brazil, Russia, India and China who even with nowadays Price/Earnings, Price/Sales and Price/Book ratios seem grossly undervalued. So, soon emerging markets will enter a new boom phase. But first, there has to come the bust, which as described above should begin in 2-3 year, not more, at leas as far as I am concerned.
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Petar
Vladimirov Posledovich is not liable for any investment losses incurred
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Respectfully yours,
Petar Posledovich
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