Federal Approval
It is no secret the Fed’s decision to support zero short-term interest rates is fueling the growth of EEM’s assets by 27% in 2020 – making it the largest ETF to hold Chinese stocks. As this federal policy continues, more investors are looking towards the strongest emerging markets without US Feds looking over their shoulder. While inflation expectations are still somewhat tame, opportunities are still ripe into summer with buying opportunities as interest rates are tentatively at record lows and energy not showing headwinds as of yet.

Asian Recovery
As investors look for value amidst the growth, China, South Korea, Japan, Taiwan and India are all on track to surpass their pre-COVID-19 performance and register yet another year of growth. Demonstrating excellent models of the Covid-19 response – South Korea and Japan – are likewise projected to pull in record growth of 8.6% and 3.2% respectively. This coming after a sharp decline of 6.2% and 5.8% in 2020. All while WSJ reporting that China’s recovery will boost the value of its stocks globally by about $5 trillion.

US-China Tension
Despite the new Administration change, the US-China trade relations still presents a threat to some of the companies within EEM. As emerging markets tend to react strongly towards distressing news, all eyes are watching how pending legislation moves through Congress with the threat of regulatory risk looming; as hundreds of Chinese companies face possible delisting in the U.S. With China refusing to cower; responding by pushing back harder and pulling its A-list companies from Hong Kong’s exchanges, to potentially block Wall Street from participating.

The intersection of opportunity
Every investor needs some exposure to emerging markets especially as rates stay attractive but this year is setting up very active as more stimulus packages come to fruition around the world.