Reasons why you might want emerging market stocks

Uncertainty from the US debt ceiling discussions is just the latest factor making emerging market (EM) stocks interesting again. But the appeal of these assets extends well beyond near-term uncertainties. Here are three long-term reasons to look beyond the US and Europe for stocks.

Firstly, with US consumers slowing their spending roll, the risk of a US recession (and further weakness in the US dollar) will boost demand for diversification into emerging markets. Secondly, the ongoing shift toward green initiatives and the diversification of supply chains will be positive for many emerging market companies. According to UK investment firm Schroders, India, Vietnam, Poland, and Thailand could see the biggest demand as developed market companies seek alternative suppliers. And thirdly, emerging market stock valuations still look cheap, and are trading at a significant discount to developed market stocks.

Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.

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