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Emerging-Market Stocks Attractive


Are you investing in the right bull market? US stocks are enjoying a ninth straight year of positive returns, but an extended rebound in emerging-market stocks may have just begun. This year through May 31, the MSCI Emerging Markets Index soared 16.6%. That has surprised many ­analysts who assumed that higher US interest rates and President Donald Trump’s “America First” foreign policies would hurt big exporting nations such as China and South Korea. But it has turned out that economic growth in the developing world has strengthened this year. Even China, whose credit rating was downgraded for the first time in nearly 30 years, saw a bigger-than-expected 6.9% GDP growth rate in the first quarter of 2017. Emerging-market stock valuations compared with those in the US still are very low.

Best emerging-market stocks…

ICICI Bank (IBN) is the largest bank in India not owned by the government, with 4,850 branches. Its assets should continue to grow rapidly because fewer than half of adults in India have bank accounts so far.

Imax China Holding (IMXCF), which is 68% owned by Canada-based Imax Corp., operates more than 400 specialty theaters in mainland China, the second-biggest movie market in the world after the US. It expects to nearly triple the number of theaters by 2021.

Samsung Electronics (SSNLF). The stock pulled back late last year after Samsung recalled 2.5 million of its Galaxy Note 7 phones due to exploding batteries. But in the first quarter of 2017, profits rebounded, up 48% year over year. While smartphones are Samsung’s best-known product, about two-thirds of its profits come from supplying semiconductor chips and display screens for the global consumer-electronics industry.

Source: Charlie ­Wilson, PhD, comanager, Thornburg ­Developing World Fund (THDAX), Santa Fe. Since its 2009 inception, its 6% annualized return has outperformed the MSCI Emerging Markets Index by 3.5 percentage points. Date: July 15, 2017
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