On Thursday, I had the pleasure of returning to the New York Stock Exchange for the second time in a week. Last Tuesday was for opening bell and this time it was closing bell with the Aussies ringing the bell for Australia Day. Thanks to Goldman Sachs Asset Management (GSAM) for the invite and the insights on their market outlook for 2018. Their tag line for this year is “Pro-growth, Pro-equity, Pro-reality.” They share our view that global growth will continue in 2018 and given the low interest rate environment that means investors should favor stocks over bonds. GSAM is advising its clients that the emerging market bull market is still in the early innings.
In the slide above, GSAM showed that like US corporate earnings, emerging market earnings are accelerating from a 2015 trough. This trend is likely to continue as margins are improving and have room to expand. In addition, emerging market PEs are 30 percent cheaper than the S&P 500.
Here are a couple of interesting facts:
- 86% of the world's millennials live in emerging markets
- China and India are the two largest smartphone markets in the world. The US comes in 3rd place.
“Bull Market Sign” by ota_photos is licensed under CC BY-SA 2.0
