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Emerging Markets

MARKET COMMENTARY  |  April 2016

World Markets Review for First Quarter 2016

Global equity returns were essentially flat as worries about slowing economic growth and falling oil prices sent markets plummeting in January and early February. Losses were tempered by a mid-quarter rally driven by improving U.S. economic data and new stimulus measures in China. Emerging markets regained some ground amid rebounding commodity prices. Bonds rose and the U.S. dollar declined against the euro, the yen and most other currencies.

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INVESTMENT INSIGHTS  |  March 2016  |  FEATURING Andrew H. Dougherty & Stephen Green

China Mired in Slow Growth, Major FX Move Unlikely

As the world’s second-largest economy, China is at an important turning point. China’s leadership has pledged to put the economy on the right track and be less opaque about its currency moves. Economist Stephen Green and China affairs specialist Andrew Dougherty discuss:

  • The outlook for China’s economy and why a soft landing is more likely
  • The case against China pulling the trigger on a big, one-time devaluation of its currency
  • Whether China’s leadership can manage the political and social implications of deep structural reforms
  • Pockets of strength in the Chinese economy during this transition to consumption-led growth 

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MARKET COMMENTARY  |  March 2016

World Markets Review for February 2016

Global stocks produced mixed returns amid investor concerns about a slowing global economy, low oil prices and ongoing turmoil in the banking sector. U.S. shares were flat, while European and Japanese markets lost ground. Emerging markets showed signs of stabilization as some commodity prices moved higher, boosting the materials sector. Investment-grade bonds advanced on safe-haven buying, and the U.S. dollar declined against the euro and the yen.

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INVESTMENT INSIGHTS  |  February 2016  |  FEATURING Mark A. Brett

The Dollar’s Ascent Could Be in Its Final Phase

Summary

  • The U.S. dollar’s five-year-long bull run may be coming to an end, particularly relative to major currencies such as the euro and the yen.
  • The headwind of a strong dollar should diminish for global and international stock portfolios.
  • Interest rate differentials and exchange rates do not always move in lockstep, so the Federal Reserve’s rate decisions won’t necessarily dictate what’s next for the dollar.
  • China’s apparent commitment to continue to devalue its currency is expected to cast a shadow over currencies in Asia and several other emerging markets.
  • As emerging economies adjust to weaker global industrial activity and Chinese growth that is slower and less commodity-intensive, some currencies may continue to weaken — but there are bright spots.

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MARKET COMMENTARY  |  February 2016

World Markets Review for January 2016

Global stocks tumbled into the new year amid worries about China’s slowing economy, rapidly falling oil prices and disappointing U.S. corporate earnings growth. Financial stocks experienced the sharpest declines, weighed down by concerns about risky loans in the energy sector and persistently low interest rates. Defensive stocks generally held up better. High-grade bonds rallied on safe-haven buying. The U.S. dollar rose against the euro, the yen and most other currencies.

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INVESTMENT INSIGHTS  | 
January 2016
 |  FEATURING Kevin G. Clifford & Robert W. Lovelace

Capital Group Hiring Where the World Is Going

American Funds portfolio manager Rob Lovelace discusses the investment group’s approach to hiring new research associates.

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INVESTMENT INSIGHTS  | 
January 2016
 |  FEATURING Kevin G. Clifford & John H. Smet

Fixed-Income Themes for ’16: Inflation, Quality

American Funds portfolio manager John Smet discusses areas of opportunity he sees for fixed-income investors looking ahead into 2016.

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INVESTMENT INSIGHTS  | 
January 2016
 |  FEATURING Kevin G. Clifford , Timothy D. Armour & Robert W. Lovelace

Investment Themes to Watch in 2016

American Funds portfolio managers Tim Armour and Rob Lovelace discuss investment opportunities in the emerging markets, oil and commodities, health care and pharmaceuticals, and the internet.

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INVESTMENT INSIGHTS  | 
January 2016
 |  FEATURING Kevin G. Clifford & Robert W. Lovelace

U.S., China Trade Places as Global Growth Engine

Portfolio manager Rob Lovelace offers his perspective on recovery and growth in China, the U.S., Japan, Europe and the emerging markets.

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MARKET COMMENTARY  |  January 2016

World Markets Review for 2015

Global stocks delivered essentially flat returns as investor enthusiasm for the U.S. economic recovery was offset by concerns over a sharp slowdown in China. Aggressive central bank stimulus measures continued to support markets in Europe and Japan, while the U.S. gradually stepped back from accommodative policies. Emerging markets stocks generally lagged their developed-market counterparts by a wide margin. Mergers-and-acquisitions activity reached a record high, fueled by cheap financing. 

Defensive stocks outpaced economically sensitive sectors. Health care and consumer staples stocks rallied, while energy and materials stocks plummeted amid falling prices for oil and other commodities. At the end of the year, the U.S. Federal Reserve raised interest rates for the first time in nearly a decade, setting the stage for tighter monetary policy in the years ahead. The U.S. dollar rose against the euro and most other currencies.

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MARKET COMMENTARY  |  January 2016

World Markets Review for Fourth Quarter 2015

Global stocks advanced amid surging M&A activity and a strong year-end rally in the technology sector. The Fed raised interest rates for the first time in nearly a decade, but cautioned that future rate increases would depend on the pace of U.S. economic growth. Conversely, central banks in Europe and Japan ramped up stimulus measures in an attempt to jumpstart lackluster economies. U.S. bonds fell and the dollar rose against the euro and the yen.

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INVESTMENT INSIGHTS  |  December 2015

Identify Investment Opportunities in a Slow-Growth World

Global Stocks Paused for Breath in 2015

Source: RIMES. As of October 30, 2015.

2016 Market Outlook, Article 1 of 6

One in a series of articles in which Capital Group portfolio managers offer their views on the current investing environment.

With China’s economic growth slowing and the Federal Reserve contemplating higher interest rates, it’s been a tough year in the financial markets. The MSCI World Index is essentially flat on a year-to-date basis amid rising volatility and widespread uncertainty over the outlook for 2016. A strong bull run over the prior seven years has also raised questions about valuations. Against this backdrop, several Capital Group portfolio managers offer their views on the current investing environment:

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MARKET COMMENTARY  |  December 2015

World Markets Review for November 2015

Global stocks produced mixed returns amid investor worries about sluggish economic growth and expectations for higher U.S. interest rates. European equities advanced on the promise of new monetary stimulus measures, however, U.S. stocks were flat and emerging markets retreated. Bonds also declined as Federal Reserve leaders indicated that a rate hike is likely in December. The dollar rose sharply against the euro and the yen.

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MARKET COMMENTARY  |  November 2015

World Markets Review for October 2015

Global stocks rallied as central bank stimulus and rising M&A activity helped offset ongoing concerns about a slowing world economy. Energy and materials stocks led markets higher amid signs of stabilization in commodity markets. Information technology stocks also advanced on better-than-expected earnings from some bellwether companies. Bonds were generally flat, and the U.S. dollar rose against the euro and the yen.

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INVESTMENT INSIGHTS  |  October 2015  |  FEATURING Brad Barrett

Changing Channels: Media’s New Direction

The landscape of media is undergoing a tectonic shift as the way people consume information, entertainment and even communicate with each other has been transformed by innovation and technology.

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INVESTMENT INSIGHTS  |  October 2015  |  FEATURING Timothy D. Armour

Digital Dollars: Ad Money Didn’t Waste Any Time Moving Online

Advertisers have flocked to the Internet and mobile as consumers change behavior

The face of the world’s media market is changing. Advertising dollars are increasingly flowing from traditional ads to digital. Increased spending on mobile, social media and digital video propelled U.S. digital advertising revenue to $49.5 billion for the full year of 2014, a 16% increase over 2013.

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INVESTMENT INSIGHTS  |  October 2015  |  FEATURING Jim S. Kang

Inflection Points Abound as Consumers Embrace New Technology

Streamers, gamers and cord-cutters are part of the landscape, but not point-and-shoot cameras

One need not look too far these days to find an example of how innovation can transform an industry. The charts above show a remarkable array of change, some of which are still evolving. Many gamers now play on mobile devices, not consoles. Most pictures are taken on phones, and most point-and-shoot cameras have been put on the shelf.

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Online and social media rival television as the main source of news in the U.S.

How people consume news has undergone a sea change. More people now get their news from digital sources than they do from either print newspapers or the radio, and digital is starting to make a move on TV as the dominant place people go for news.

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INVESTMENT INSIGHTS  |  October 2015  |  FEATURING Brad Barrett

Going Mobile: The Serious Business of Playing Games

With sales about to exceed $100 billion a year, video games are hardly kid stuff

In 2013, Grand Theft Auto V became the fastest-selling entertainment product of all time, with sales of $1 billion in just three days. That probably disabused most people of the notion that video games were kid stuff.

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INVESTMENT INSIGHTS  |  October 2015  |  FEATURING Andrei Muresianu

Has Streaming Turned Cable TV Into a House of Cards?

Netflix and others have redefined TV, but consumers are reluctant to cut the cord

Netflix can seem like a juggernaut. The company recently reported that it had 65.6 million subscribers at the end of the second quarter of 2015. Of those, 42 million are in the U.S. and another 23 million are international.

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MARKET COMMENTARY  |  October 2015

World Markets Review for Third Quarter 2015

Global stocks tumbled amid increasingly alarming signs of an economic slowdown in China and uncertainty over U.S. monetary policy. Energy and materials stocks plummeted on worries about declining global demand for commodities. Defensive sectors, including consumer staples and utilities, generally held up better than cyclical stocks. Government bonds rallied and the U.S. dollar slipped against the euro and the yen. 

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INVESTMENT INSIGHTS  |  September 2015  |  FEATURING Greg Garrett

A Mix of Headwinds and Tailwinds

Lower Commodities, Demographics May Be Tailwinds for India, Headwinds for Russia

West Texas Intermediate crude oil price, London Metals Exchange copper price and Thomson Reuters/Jefferies CRB Iron Ore 62% FE CFR China Cash price. Month-end price data (rebased to 100 starting December 31, 2013) through July 31, 2015. Population data and transition characterization from Moody’s Investors Service, using United Nations data.

Sources: FactSet, Moody’s Investors Service.

Coinciding with the weakness in industrial commodity prices, energy prices have also fallen significantly since the middle of 2014. This has been driven by the growth in supply from new sources in North America as well as some impact from reduced global demand.

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INVESTMENT INSIGHTS  |  September 2015  |  FEATURING Laurentius Harrer

A Period of Adjustment Is Underway

Weaker Currencies, Higher Yields Have Helped Create Attractive Valuations

Source: J.P. Morgan 

Through 7/31/15. Month-end yields for U.S. dollar–denominated bonds and local currency bonds are drawn from the J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified and J.P. Morgan Government Bond Index-Emerging Markets (GBI-EM) Global Diversified, respectively. EM exchange rate (rebased to 100 on 6/30/10) implied by latter bond index.

Six years ago, the global economy was emerging from recession in the wake of the financial crisis. At that time, developing countries such as China, India and Brazil were the engines of global growth, while emerging markets debt was a source of strong investment returns for bond investors.

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INVESTMENT INSIGHTS  |  September 2015  |  FEATURING Greg Garrett

A Time When Active Investing Can Prove Its Mettle?

Credit Spread Dispersion Is Evident Across Emerging Markets Bonds Five-Year Government Bond Yield Spreads to U.S. Treasuries (as of July 31, 2015)

Source: Datastream

On the surface, there are many headwinds confronting emerging markets debt. A tightening of monetary policy by the Federal Reserve could result in some spread widening. Meanwhile, some emerging markets countries face their own political, economic and fiscal challenges.

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INVESTMENT INSIGHTS  | 
September 2015
 |  FEATURING Mark A. Brett

Bond Prices May Already Reflect Fed Rate Hike

A portfolio manager discusses opportunities for bond investors created by the market’s anticipation of a U.S. interest rate hike.

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Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses or the funds’ characteristics statement, which can be obtained from a financial professional or your relationship manager, and should be read carefully before investing. 

Bond ratings, which typically range from AAA/Aaa (highest) to D (lowest), are assigned by credit rating agencies such as Standard & Poor's, Moody's and/or Fitch, as an indication of an issuer's creditworthiness.

Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries. 

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. This information is intended to highlight issues and not to be comprehensive or to provide advice. 

Past results are not predictive of results in future periods.