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The 5 Best Emerging Markets for 2018

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There are bull markets and bear markets… and then there are emerging markets.

While the United States has been the engine that makes the world economy go for nearly a century now, it’s also a mature economy. We’re happy to see GDP growth in the 3% to 4% range. Yet in many EMs, GDP growth rates of 8% to 10% are fairly common. At those rates, the size of the economy doubles every seven to nine years. So, you’d expect emerging-market stocks to be perennial outperformers.

That’s not always the case. The iShares MSCI Emerging Markets ETF (EEM) – the most popular and easily accessible vehicle for trading a basket of emerging-market stocks – soared from just $11 per share in April 2003 to nearly $56 per share in October 2007. That means investors in a broad, boring EM fund made five times their money in a little over four years.

Alas, it didn’t last. EEM dropped below $20 per share in the 2008 meltdown, losing about 65% of its value. U.S. stocks took a similar beating too, of course, but America quickly rallied and recouped its losses, while EM stocks remained in a rut for the better part of the following decade.

Why? Well, it’s complicated. For instance, slower growth in the U.S. and Europe meant less demand for manufactured products from East Asia, which in turn meant less demand for commodities from Africa, Latin America and Southeast Asia. And a surge in crude oil production from American frackers caused energy prices to sag, which sapped growth in Russia, the Middle East and other oil-exporting countries.

However, after finding a decisive bottom in 2016 and rousing to life in 2017, emerging-market stocks appear ready to shine again. Today, we’re going to look at five emerging markets that look particularly promising in 2018.

SEE ALSO: 5 Emerging-Markets Funds That Are Crushing U.S. Stocks

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