Emerging markets can be good investment opportunities next year, but ultimately, that will be dependent on U.S. politics.
Analysts have told CNBC they foresee an improvement in emerging markets in 2017, citing stronger growth in some of the countries, relative political stability and positive company earnings. However, the election of Donald Trump and the expectation that the U.S. will adopt a more protectionist approach pose real risks.
"We still see improvements in the underlying growth of emerging markets, supporting greater optimism than we've seen in years. However, should any of the president elect's EM (Emerging Market)-unfriendly campaign proposals make their way onto the policy agenda, sentiment around emerging markets would certainly suffer." Emily Whiting, client portfolio manager for the emerging markets at JPMorgan, told CNBC via email.
Emerging market stocks and currencies saw an immediate sell-off after the election of Donald Trump.
Investors believed that Trump's policies to end trade deals and impose tariffs on China would negatively affect emerging markets.
But his pro-investment agenda has raised expectations of higher interest rates and a stronger dollar, which have offset the impact of big losses for the emerging markets.