North Korea deals and potential China trade wars are making waves in international markets, according to Jeremy Schwartz, director of research for WisdomTree Investments Inc., a New York City-based exchange-traded fund company.
The meeting between President Donald Trump and North Korea’s Kim Jong-un could reduce risks for international ETF investments in emerging and developing markets, Schwartz said. “It is amazing where we are now compared to where we were a few months ago with North Korea.”
Schwartz made the comments Friday during a wide-ranging press call on ETFs and international investing arranged by Charles Schwab.
“This is the first time an American president has met with North Korea, a country that needs a lot of investment,” Schwartz added. “China is the big supporter of North Korea, but China, Japan, South Korea and the United States all have a vested interest in making this a success. I hope it opens up markets.”
He also spoke about China. Unlike other emerging markets, such as India, for instance, China has an aging population, but its market and economy will continue to grow, especially in technology, Schwartz said. “The continuing rise of China will be the big story for the next decade.”
A lot of investors are worried about the possible trade war developing with China, but United States companies now lose 50 percent of their intellectual property when they move there.
India, on the other hand, has a young population and is catching up with the rest of the world. Investments there have the potential for earnings growth with allocations being made more to equities than bonds. Schwartz said he likes India investments over the longer run.
In the United States, he said he would support small cap over large cap.
“The thing that has surprised me is how strong the dollar has remained, but I think people are taking too much risk on international investments without hedging,” he added.
In currencies, the yen can act as a diversifier.