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Emerging Markets Outlook

Title Speaker Date


Templeton Emerging Markets Overview - March 2014

Apr 15, 2014

Featuring:  Mark Mobius, Ph.D., Executive Chairman, Templeton Emerging Markets Group

  • Emerging markets recovered from a weak start to the year, recuperating most of the losses recorded in January.
  • Concerns about the impact of reduced levels of US quantitative easing on emerging-market equities hurt investor sentiment, as did geopolitical tension between Russia and Ukraine, weaker-than-expected macroeconomic data from China and political unrest in Thailand and Turkey.
  • Weakness in a number of emerging-market currencies and inflation concerns led central banks in India, Brazil, Russia, South Africa and Turkey to raise interest rates during the quarter. However, expectations of a mini-stimulus package from China, anticipation of favorable election outcomes in Indonesia, India and Turkey, and de-escalation of the crisis in Ukraine toward quarter-end led to a rally in equity prices.
  • Latin America was the best-performing region, led by performances in Brazil and Colombia. Despite Standard & Poor's downgrade of Brazil’s credit rating, the Brazilian market ended the quarter with positive returns due to hopes of political change and an appreciation in the real, while Colombia’s performance was driven by better-than-expected macroeconomic data.
  • At the other end of the spectrum, eastern Europe underperformed mainly due to weakness in Russia and Hungary.
  • Asian markets recorded mixed performances with Indonesia, India, the Philippines and Thailand recording gains while China, Hong Kong and South Korea ended the quarter with declines.

 

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Important Legal Information

Special risks are associated with foreign investing, including currency fluctuations, economic instability and political developments. Investments in emerging markets, of which frontier markets are a subset, involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Because these frameworks are typically even less developed in frontier markets, as well as various factors including the increased potential for extreme price volatility, illiquidity, trade barriers and exchange controls, the risks associated with emerging markets are magnified in frontier markets.

A note to our readers: Given the rapid changes that can take place in global markets, it is often difficult to provide up-to-date materials that address the most current situations. The following update is valid only as of March 31, 2014.

The significant growth potential offered by emerging markets remains accompanied by heightened risks when compared to developed markets, including risks related to market and currency volatility, adverse social and political developments, and the relatively small size and lesser liquidity of these markets.

The information provided is not a complete analysis of every material fact respecting any country, industry, security or investment. Opinions expressed are those of Dr. Mobius and are subject to change without notice. Statements of fact have been obtained from sources considered reliable. Because market and economic conditions are subject to rapid change, his analyses are valid only as of March 31, 2014. His opinions are intended to provide insight as to how he analyzes securities and are not intended as individual investment advice. Performance information is historical and should not be considered predictive of future results. All securities investments fluctuate and involve risks.

Investors should carefully consider a fund’s investment goals, risks, charges, and expenses before investing. To obtain a summary prospectus and/or prospectus, which contains this and other information, talk to your financial advisor, call us at (800) DIAL BEN/342-5236, or visit franklintempleton.com. Please carefully read the prospectus before you invest or send money.

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