2018 has been a tough year for many investors, especially those in emerging markets.
This chart from JP Morgan shows why.
It looks at the year-to-date returns of specific asset classes from both developed and emerging markets.
In contrast to US stocks and dollar which have risen strongly this year, emerging market stocks and currencies have been smashed, a performance in stark contrast to what was seen in 2017.
While not the only factor behind the divergence between US and emerging markets, JP Morgan says the selloff in the latter has accelerated since late August as trade tensions between the United States and China, in particular, have escalated.
As for if and when the US may look to take a more conciliatory approach to trade negotiations, JP Morgan believes that’s unlikely to occur until it starts to damage the US economy or lead to a decline in US stock prices or Trump’s approval rating.
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