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Emerging Markets Outlook

Title Speaker Date


Templeton Emerging Markets Overview - May 2015

May 31, 2015

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

  • Global equity markets had an unexpected start in May as bond yields jumped in several major markets but recovered to finish almost flat in US-dollar terms.
  • The strength of Japanese stocks on strong economic data and of US equities on hopes that rather sluggish data would delay monetary policy normalization helped developed markets record a small gain.
  • Bond yields fell back from mid-month highs, but finished above their starting points.
  • Emerging markets consolidated during May after the strong performance recorded in April.
  • Commodity prices reached mid-month highs but then retreated with oil finishing little changed. While the prices of most industrial metals lost ground, iron ore prices finished sharply higher.
  • The US dollar strengthened again after its March and April weakness.
  • Among emerging markets, Colombia and Brazil, two markets that had been very strong in April, led the May retreat, with renewed oil price uncertainty and foreign currency pressures affecting both markets, while weak macroeconomic data and concerns about the impact of tax increases added to pressures on Brazil.
  • South Africa was another weak market, with rising bond yields, difficult wage negotiations in the mining industry and sluggish trends in commodity markets all pressuring equity prices.
  • Several Central and Eastern European markets also drifted as tensions over Ukraine increased and Greece, once again, appeared headed toward insolvency. In Poland, the unexpected election of a politician outside the governing party as president of Poland surprised investors.
  • In contrast, some markets that had not participated in the April rebound saw stronger May performances. Investors overlooked a sluggish corporate results season in India to focus on an improved inflation outlook and progress in lowering subsidies for domestic petrol and diesel prices. Indonesia also rallied, helped by plans to cut the corporate tax rate and raise income tax thresholds.
  • Attractive valuations for some recently weak stocks also played a role. Turkey and Mexico also finished ahead. China’s domestic equity markets continued to rally, though a sharp selloff at month-end limited gains, while weakness for energy and telecommunications stocks left the MSCI China Index lower.

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Important Legal Information

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 May 31, 2015.

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 May 31, 2015. 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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