EM Volatility Is Normal

The MSCI Emerging Markets Index moved to a bear market last week, down more than 20% from the late January peak. Although this weakness cast many bearish headlines, here’s the catch: This type of volatility is actually quite normal.

“Going back 15 years, we found that 11 times that EM pulled back at least 15% at some point during the calendar year and in six of those times, EM stocks actually gained on the year,” explained Senior Market Strategist Ryan Detrick.

As our LPL Chart of the Day shows, large pullbacks are common for EM; but so is finishing the year in the green after such pullbacks.

Emerging Markets Can Be Positive For the Year and Have Large Intra-Year Pullbacks

Please look for our Weekly Market Commentary due out later today, as we take a closer look at the EM pullback and why it very well could be an opportunity for contrarian investors.


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