Recent weakness in certain foreign markets can provide an opportunity to rebalance your portfolio and avoid being overexposed to late-cycle U.S. markets. Below are three regions that could represent opportunities going forward:
Europe – Stocks may have sold off more than financial conditions warrant, creating some compelling opportunities. Investors should look for high-quality, value-oriented Europe sectors with less U.S. exposure, such as financials, utilities and telecom.
Japan – Its labor market is seeing the most improvement in decades and business sentiment is up. Corporate profitability and earnings momentum are improving. These conditions may support growth and benefit equities.
Emerging Markets – The downturn in currencies and stocks may be overdone. China weakness seems overstated and a rebound once currency and headline fears abate may benefit emerging markets. Investors should stay with export-oriented emerging market countries that are less sensitive to dollar strengthening, such as Russia, Taiwan and Korea.