Emerging stock markets are one of the alternatives you have to invest your savings and make them profitable with the maximum returns in the operations you are going to carry out. These are high-risk moves that only a very specific profile of investors can support at the moment. Is it your case? Not in vain, the risk that you contract is excessively high, above that generated in other stock markets, although the moment they resume their upward trend they will also be the ones that will give savers the most joy.
It is proven, as in recent months their prices have moved under a greater dose of fluctuations in their prices, and dominated by extreme volatility rare in domestic markets. Few retailers dare to take positions in emerging market stocks for precisely these reasons. Profits can skyrocket, true, but losses aren't far behind in their fierce virulence either.
What are the emerging markets?
From the beginning, the first thing to do is to identify emerging markets, which have been so fashionable in recent months, and as a result of different reasons. Initially they are linked to certain countries of great specific weight in the world economy. They are the so-called BRICS, which include Brazil, Russia, India, China and South Africa. Although the first thing that is noticed in them, is that they are very unequal in terms of the potential for revaluation that they present in the equity markets.
To this must be added other emerging economies that are not part of this select group of countries. And in which the main countries of Southeast Asia are included, and even some very specific ones from the former Soviet bloc. Without forgetting - of course - markets such as the Argentine, Turkish or Mexican. The offer they offer you, and as you can see, is very wide, but also diversified, which can help you channel your investment wishes at any given time.
The evolution of their prices in the financial markets is really explosive. When its general trend is bullish, most stocks go up very strongly, and vice versa. From there the enormous difficulty to operate with them. Of course it is not an easy task, and surely it can bring you more than one problem if you opt for one of its stock markets.
There are many differences between the major emerging markets. From those who have imposed a downward trend of great intensity, as in the Russian case. Others who enjoy the recommendations of the most important intermediaries in the financial markets, and which is led by India. Going through a series of proposals that present different realities, both in their economies, as well as the evolution of their respective national indices. There is everything, as some experts allude in this segment of equities.
How to operate with these markets?
If in the coming months it is your intention to take positions in any of them, you will have no choice but to have a good cup of linden. Strong emotions will make an appearance from the moment you enter their markets. For these your actions must be very controlled, and special limited in terms of the monetary contributions of your purchase orders. With no more than 25% of the total value of the equity available for these operations.
Faced with this complicated scenario, you will have no choice but to act with special caution, trying to protect in the best possible way all the movements that you develop in emerging equities. Trying, in any case, to be very selective to lean towards those countries that have the bags with the best technical appearance. And if it can be by imposing an order to limit losses, then much better. You will ensure that you do not lose a very important part of your personal or family assets.
Likewise, you should complement these operations with more conventional markets, which at least show greater stability in the evolution of their indices. It won't be a bad starting point to really get closer to these financial markets. Even if its evolution improves for the next trading sessions, it may even become a clear option to channel your savings.
Another aspect that you will undoubtedly have to assess is whether you really need to take positions in these risky markets. If the answer is positive, arm yourself with courage because tranquility will not preside over your operations. It's more, you should focus on them in the short term. And if you quickly get capital gains, it will not hurt to undo positions just as quickly.
What do the emerging ones offer you?
Emerging markets, even being more complicated to operate with, provide you with benefits that should not be underestimated, especially if you are an investor used to operating with some of their stock markets. And that could be summarized in the following actions that we expose you from this article:
- You can take advantage of the strong dynamism of their quotes, and that even make their securities much more inclined to execute the operations on the same day, quickly reaping their possible benefits.
- They present a greater variety of business sectors than those that you can find at the moment in the national stock exchanges, especially in new technologies and raw materials.
- The plurality of schedules that some of these markets have makes your investments never rest, since you can develop the movements even at night, if this is your wish.
- Although its commissions are more expansive, may be amortized by an increase in the yields of the operations in variable income, as soon as the markets chosen after your decision help.
- They have a powerful offer, since at present you can opt for many countries that meet these characteristics, and located throughout the world map, with significantly different economic models.
- They allow you to create a truly alternative investment portfolio that complements the rest of the contributions in the financial markets, and with which to make the savings profitable in the most correct way possible.
Dangers of your hiring
Nevertheless, the most advisable thing is that you also meditate all the inconveniences that will be generated with your participation in these markets. Even more than you might initially imagine. And that in any case, they will cause you more than a scare, which affects your current account balance, and maybe even your health.
To protect the assets of your personal accounts - and if the desire is to invest in emerging markets - you will have no better way to do it than putting your particular case in the hands of a financial expert. Nobody better than this professional (authorized in banking entities as an additional service as a customer that you are), to decide whether or not it is convenient for you to go to these special markets. They surely have a convincing answer to your demands.
Another variable that you have to consider is that you must provide a monitoring of these markets, very deep, and on a regular and disciplined basis. Only in this way will you be in a position to start operations. And of course, watching them almost every day. If not, you may have more than one problem that is hard to fix.
If you are still stubborn in your original approach, it would be really advisable that look at bull cycles to start taking positions (buy), and you can develop the movements under a control in their prices. And at the slightest weakness, abandon positions, so that depreciations do not deepen in this way. That will be your goal from the beginning.
They are markets are more sensitive to economic downturns, so that when they arrive, their bags show much more pronounced falls, sometimes in a virulent and even irrational way. And that under no circumstances should you formalize operations in periods of greatest instability.
Its dependence on the currency markets is increasingly palpable, their evolutions being at times very intertwined, to the point that the former can set the guidelines for their actions in the stock markets.
Some tips for trading in these markets
The complexity of its operations, on the other hand, requires very special actions on the part of small and medium investors. To help them develop these movements, we provide them with a series of behavior guidelines that will come in handy from now on.
- They should not focus solely on emerging markets, but on the contrary, this option should only be configured as an alternative for investment. Nothing else, keep it in mind from now on.
- You have to be very selective in operations carried out, even at the destination of the markets. Since not all emerging markets are the same, and there will always be more business opportunities in some than in others.
- If you do not know the markets where you are going to invest your life savings, you will do better to refrain from taking positions, choosing others you are more familiar with.
- Some of their economies are governed by parameters of deep instability, and that as a consequence, it is not worth giving them your trust when channeling investments.
- They are more advisable for other series of financial products, perhaps more aggressive, but that have at least sufficiently broad mechanisms to make them profitable in a shorter period of time. Even combining them with other financial assets, as in the specific case of investment funds.
- And finally, really assess whether it is in your best interest to take risks that their operations entail, since after deep meditation you may come to the conclusion that it is not the right thing for your interests.