TRADE ALERT: Shift Some Money Here
It’s one of the biggest questions hanging over financial markets and the global economy right now:
Will the U.S. and China hammer out a trade deal or will there be no deal… ushering in more uncertainty for the world economy?
Over the past month, prospects brightened that Washington and Beijing officials could get their act together. And while the running narrative of “progress is being made” was growing stale…
It’s a heck of a lot better than the news we all woke up to this morning.
Stocks Open the Week in a Sea of Red
U.S./China trade talks have stalled, and more tariffs are back on the table. Trump specifically threatened $200 billion more in Chinese tariffs.
Goldman Sachs economists told CNBC Monday:
“This represents a shift from the optimistic statements from U.S. officials over the last few weeks and suggests that the probability of a near-term agreement is at least slightly lower than it seemed to be recently…”
On the year both U.S. and Chinese stocks have been on fire. Major averages here in the States were up over 16% to close out last week. Chinese A-Shares listed on the Shanghai Composite were up an incredible 23% through the beginning of April.
It’s all the more reason why we are so high on emerging-market stocks, grabbing a stake in something like the iShares MSCI Emerging Market Index, which includes a large allocation to Chinese companies.
But with the possibility that trade talks stall and more tariffs are levied, it may be time to consider the final frontier in investing as a safe haven for some of our money.
Frontier Markets Are Small. The Profit Opportunity Is Not
Frontier markets are more risky than developed markets. They can be politically unstable, often have low liquidity, are subject to questionable financial reporting and sometimes see large currency fluctuations.
However, there are also huge profits to be made in frontier markets and I encourage long-term investors with a high tolerance for volatility to include a 5–10% allocation to frontier markets.
If you’re not prepared to do your own homework into which frontier markets have the best profit potential, you can still invest in them with a single mouse click.
In fact, there are three ETFs you should consider immediately:
- Guggenheim Frontier Markets ETF (FRN)
- IShares MSCI Frontier 100 ETF (FM)
- Global X Next Emerging & Frontier ETF (EMFM).
More affluent middle classes are springing up all over in frontier markets.
Africa, for example, has the fastest-growing middle class in the entire world, doubling to 313 million people in the last two decades.
That growing middle class translates into consumers with plenty of money to spend.
The ETFs will help you capitalize of this middle-class boom and help protect your money from more trade talk volatility shaking up the U.S. and Chinese markets this week.
Here’s to growing your wealth,
Chief Income Expert, Mike Burnick’s Wealth Watch