Markets

The Zacks Analyst Blog Highlights: Mobile TeleSystems, Grupo Financiero Santander Mexico S.A. B. de C.V., HDFC Bank, OneSmart International Education and China Life Insurance

An image of a quarterly report on a screen
Credit: Shutterstock photo

For Immediate Release

Chicago, IL - December 31, 2018 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Mobile TeleSystems MBT , Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander BSMX , HDFC Bank Ltd. HDB , OneSmart International Education Group Ltd. ONE and China Life Insurance Company Ltd. LFC .

Here are highlights from Friday's Analyst Blog:

New Lease on Life for Emerging Markets in 2019: 5 Picks

Emerging markets have had a pretty rough year, but next year could be completely different. A rising interest rate environment and trade conflict between the United States and China compelled investors to dump emerging market stocks.

However, a possible slowdown in U.S. central bank's policy tightening path, a possible U.S.-China trade truce and significantly low levels of current valuations could easily propel emerging market stocks in the New Year, which certainly calls for investing in these shares.

Fed Policy Tightening to Slow Down

The Fed has hiked rates four times this year, exerting pressure on emerging markets. The iShares MSCI Emerging Markets exchange-traded fund (EEM) is currently down 20% from its 52-week high. EEM, thus, is not only trading in the bear market territory but is also on the brink of registering its first yearly decline since 2015. Individual ETFs tracking Brazilian, Mexican, Russian, Chinese, Indian and South Korean stocks are also down more than 8% so far this year.

But, the Fed now is widely expected to slow down its policy tightening path. In fact, the CME Group's FedWatch tool shows that the central bank may not hike rates at all next year. Chief investment officer at Guggenheim recently added that there is a 50% chance the Fed may even turn around and trim interest rates.

Such a slowdown in Fed tightening policy or even a reversal in policy will surely boost emerging market stocks. A loose monetary policy leads to lower rates and eventually a weaker dollar. This in turn helps improve emerging market exports to the United States.

Upbeat News for Global Trade

The United States and China, in the meantime, have slapped a slew of tariffs on billions of dollars of each other's commodities. The United States has for quite some time complained that China has not opened its economy as much as it has and has also charged China of intellectual-property theft.

Such tit-for-tat tariffs on each other's imports unnerved investors as it increases the threat of widespread recession and eventually lower corporate profits. In fact, such conflicts have an overwhelming impact on especially emerging markets as tighter trade situations affect export-driven economies.

But, things are currently looking up with both sides willing to resolve the issue. The Trump administration is ready to send a delegation to hold talks with their Chinese counterparts during the week of Jan 7, per Bloomberg News. Larry Benedict, CEO of The Opportunistic Trader platform chipped in and said that "emerging markets - particularly China - could get a major boost if both sides resolve this issue." He added that "at some point, we're going to have to do some sort of permanent trade deal with them. If that happens, I think China can outperform the U.S. It's the same thing with the EEM. I think there is some opportunity there."

EM Valuations Most Attractive in 3 Years

Thanks to the beating the emerging market stocks took this year, they now have far more attractive valuations compared to the developed economies. This year's plunge pushed EEM's price-to-earnings ratio (P/E) down to 11.41, its lowest since February 2016.

Emerging market stocks, thus, won't burn a hole in your pocket. And even if the emerging markets face volatility next year, it shouldn't bother investors much as they will be buying emerging market stocks at a cheaper price compared to last year.

5 Solid Buys

Taking the above-mentioned factors into consideration, we thus selected five emerging market stocks that flaunt a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Mobile TeleSystems provides telecommunication services. The company was founded in 1993 and is headquartered in Moscow, Russia. The company's shares have tanked 31.3% so far this year but are forecast to gain a whopping 67.6% next year.

Banco Santander (México), S.A., Institución de Banca Múltiple, Grupo Financiero Santander provides various banking products and services in Mexico. The company's shares have fallen 17.9% on a year-to-date basis but are expected to gain a steady 10.5% and 8% next quarter and year, respectively.

HDFC Bank Ltd. provides a range of banking and financial services to individuals and businesses. HDFC Bank Limited was founded in 1994 and is based in Mumbai, India. The company's shares have gained a meagre 0.6% so far this year but are likely to rally 17.1% and 25.2% next quarter and year, respectively.

OneSmart International Education Group Ltd. provides tutoring services for kindergarten and primary, middle, and high schools in the People's Republic of China. The company's shares have tanked 29.5% so far this year but are forecast to gain a solid 19.4% next year.

China Life Insurance Company Ltd. operates as a life insurance company in the People's Republic of China. The company's shares have slipped 33.4% on a year-to-date basis but are projected to gain a superb 22.9% next year.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss . This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

HDFC Bank Limited (HDB): Free Stock Analysis Report

Grupo Financiero Santander Mexico S.A. B. de C.V. (BSMX): Free Stock Analysis Report

China Life Insurance Company Limited (LFC): Free Stock Analysis Report

Mobile TeleSystems OJSC (MBT): Free Stock Analysis Report

OneSmart International Education Group Limited (ONE): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

BSMX MBT LFC HDB

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More