A Tough Year: 2018 Emerging Markets Performance

By Patricia Ribeiro & Nathan Chaudoin - January 2019

Introduction

During much of 2018–particularly Q3–exogenous events dominated emerging markets (EM) equity performance. Market leadership was defined less by earnings and instead by geopolitical concerns and U.S. dollar (USD) strength. Such a market environment, which runs contrary to our approach, drove our 2018 underperformance.

While last year’s market environment was challenging, we believe it created a substantial dislocation between stock price and company earnings, giving rise to opportunities heading into 2019.

2018 Market and Performance Review

Last year was a tough year for emerging markets. After gaining more than 8% in January, the backdrop quickly deteriorated, and EM struggled for the remainder of the year. Pro-cyclical fiscal expansion in the U.S. drove the U.S. Federal Reserve (Fed) to hike rates and strengthen the USD. This, combined with a protectionist tilt in trade policies, put pressure on EM. Add the specific domestic political challenges in countries such as Turkey and Argentina, and we got the market turmoil of 2018.

Patricia Ribeiro
Sr. Portfolio Manager
Nathan Chaudoin
Nathan Chaudoin
Sr. Client Portfolio Manager

A Tough Year: 2018 Emerging Markets Performance

January 2019 | Notes from the Emerging Markets Equity Desk

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      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.