Emerging Markets Sentiment rises to three-year high
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23 August 2016
Posted in
Special research
The monthly sentix indicator measuring investors’ sentiment for emerging markets equities points towards rising stock indices. Investors continue to show an unbridled willingness to purchase emerging markets stocks as the sentix index marks the highest reading since three years ago. Developments of economic expectations and commodity prices fire investors’ imagination.
In August, the sentix Asset Class Sentiment for Emerging Markets stocks climbs to the highest value since May 2013. Rising commodity prices and recovering expectations on the economic development of emerging markets increase investors’ appetite for emerging markets equities. Especially China’s economic vitality boosts confidence. In contrast, just a year ago (August 2015) investors’ sentiment hit record lows as fears about a “hard landing” of China’s economy inundated financial markets. Today, that’s not an issue anymore. Respectively, our indicator shows the most dynamic 12 months increase since the inception of the Asset Class sentiment indices in 2007.
However, the emerging markets sentiment has not yet reached overbought territory (refer to chart). The outlook is promising that investors continue to invest in equities due to their rediscovered passion for emerging markets. Ultimately, emerging markets equity prices could continue to increase even further.
