The rate of economic and political change is picking up in 2020, and investors may have to look carefully to find opportunities in international markets.

As U.S. markets gained steam early in the year, international stock pickers are declaring that their time has come, and a strong valuation-driven argument for moving assets into international markets can be made.

“The U.S., as wonderful as it is, does not have a monopoly on good businesses,” says Matthew McLennan, head of First Eagle Investment Management’s Global Value Team and portfolio manager on its Global Value and International Value portfolios. “Since international markets have underperformed, there are opportunities around the world to deploy capital.”

But the world is fraught with transformational change, said Ian Bremmer, president and founder of the Eurasia Group, while speaking to advisors at January’s TD Ameritrade National LINC Conference.

Among the transformations Bremmer discussed were an end to the era where the U.S. exists as the lone superpower in international relations, a clear movement away from globalization and the accelerated development of disruptive technology around the world.

“In geopolitics, there will be a global order that comes after what we’ve all lived with post World War II,” said Bremmer. “For the next few years, this is going to be a more challenging and volatile environment, and I don’t think that’s reflected in American markets today.”

Neither Bremmer nor the asset managers who spoke with Financial Advisor believed that a global recession was pending in 2020. Most managers predict slow—but positive—global growth.

International markets should grow at a faster rate than the U.S., says David Semple, who oversees VanEck’s emerging markets equity team and serves as portfolio manager for the firm’s emerging markets equity strategy.

“We expect a modest to better global growth,” Semple says. “Compared to the rest of the world, the U.S. will be fine, but not as exciting. The rest of the world should have more growth; in emerging markets, economies are running significantly faster than the global growth rate.”

While the coronavirus has caused a slowdown in international markets, the investors didn’t see the outbreak as a long-term threat to economic growth.

But in the near term, and especially in China, the virus is having an impact on GDP, says Patricia Ribeiro, senior vice president and senior portfolio manager at American Century Investments, where she manages the firm’s Emerging Markets Fund and Emerging Markets Small Cap Fund.

“We don’t know how long it will take for the outbreak to subside, but we do know it will have an impact on the quarterly data,” Ribeiro says. “That doesn’t change our outlook on the stocks. If we look longer term, the drivers of growth are still there.”

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