Over the last few years, emerging markets haven’t exactly lived up to their promise. Investors typically turn to the faster-moving nations as they are in the beginning stages of their economic development. This led to soaring gains in the late nineties and through the credit crash and Great Recession.
However, a myriad of factors have kept nations like China, Brazil and South Africa down over the last few years. Much of the developing markets’ promise has gone unfilled.
But times are starting to change, and stocks in developing nations are, once again, on the rise. For dividend investors, this is a particularly interesting time as emerging markets offer some pretty good opportunities. However, these opportunities won’t last long as stocks in these regions begin to surge.
Hitting a Wall
Travel back in time to the end of the dotcom boom. It’s here – when China and the rest of its emerging market cohorts began to get cooking. Economic development, rising middle classes and higher commodity prices/infrastructure development drove shares of stocks in developing regions. Between their low, after the dotcom bust in March 2003, and their peak, in October 2007, emerging markets, as represented by the iShares MSCI Emerging Markets ETF (EEM), surged more than five-fold.