If you wanted to crush President Donald Trump last year, there was a way even more efficient than giving indiscreet interviews to Michael Wolff: betting on emerging markets in Latin America and Asia, where the returns made Dow 25,000 look as tiny as Kim Jong Un's button.
But can emerging markets keep pushing higher in 2018? Still relatively cheap stocks, as well as structural reforms in a long list of nations, suggest they can, experts say. Unless, that is, Trump delivers on campaign promises to restrict global trade, or at least tries to hold it up while the rules of the game are rewritten to favor the United States.
He has threatened to scrap the 2011 U.S. free trade deal with South Korea, prompting Seoul to begin preparations for new talks, and said just last week that terminating the North American Free Trade Agreement would yield "the best deal." A more isolationist America could ignite a trade war with China and cause ripple effects in global trade and the world's economy. That could hurt emerging markets.
So, too, could any geopolitical flare-ups, such as a Trump nuclear war showdown with North Korea. Already this year the war of words between the president and Kim Jung Un has captured headlines.
The MSCI Emerging Markets Index rose 37 percent last year, handily beating the 19.4 percent climb in the Standard & Poor's 500. That index tracks 846 companies in 24 countries, representing about 85 percent of the market capitalization of the markets it follows. The biggest names are familiar to U.S. investors: Chinese internet companies Tencent Holdings and Alibaba Group, Korea's Samsung Electronics and Taiwan Semiconductor Manufacturing.