Martin Schulz, Team Leader Growth International at Federated Hermes.
What is your international equity outlook for 2021?
We've a very constructive outlook on the international markets for 2021. With the end of the pandemic and obviously the vaccine coming, we expect that all this liquidity will lead to a stronger international marketplace. And so we'll see a global economic upturn be very, very powerful in 2021. And, really, the biggest beneficiaries are going to be the emerging markets. And so if you look at Latin America who has been a laggard, they will do well. If you look at places like South Korea, they will continue to do well because it's very cheap. And from that perspective, the U.S. which has had a strong dollar and has been a market which has been now quite overvalued relative to the rest of the world for quite some time, we do expect that the international markets and particularly the emerging markets will do best in that scenario.
What factors are most likely to impact global markets?
The structural changes that we expect to affect the international markets, obviously the U.S. dollar is the biggest of that one. And with that being trading at a lower level, you're going to see more liquidity outside the U.S. But really there are other trends in place as well. So obviously as it relates to, for example, vaccines or as it relates to basically electric vehicles, you see that uptake being taken over very quickly. Places like South Korea, places like in Europe. So the green movement is for real, and we continue to invest in those countries and in those companies that have the growth profiles that will be playing into those themes, so to speak. And so our top-down country allocation approach likes Asia. We continue to see very, very interesting opportunities elsewhere as well.
Disclosure: Views are as of the Nov. 13, 2020 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specific security or sector. International investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging markets securities can be significantly more volatile than the prices of securities in developed countries and currency risk and political risks are accentuated in emerging markets. Past performance is no guarantee of future results. Federated Global Investment Management Corp. (11/20) 20-40552