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Beyond the S&P 500 — strategist says these foreign markets could offer major returns

These foreign hotspots could offer major returns, strategist says

U.S. markets have stretched to records again.

The broad-based S&P 500 and tech-focused Nasdaq hit all-time highs on Wednesday as fears over the coronavirus outbreak began to recede and the bulls rushed back in.

But after a steep run to records for U.S. markets, some strategists are looking farther afield for value.

"The stock market, the bond market, and the dollar are all up in value because we're dealing with this virus outbreak uncertainty still. Yet, there's value in the foreign markets, particularly when you're looking at the markets that are driven by the virus outbreak locally, and that's particularly the Asia-Pacific markets," Ben Emons, managing director of global macro strategy at Medley Global Advisors.

The FXI China large-cap ETF, the largest of the China ETFs, declined 13% from a mid-January peak to the end of January. Since the outbreak has intensified, however, it has managed to climb 7%. China has been the hardest hit by the virus with more than 74,000 confirmed cases.

"Look at all the stimulus that [China is] putting in the system there, and the countermeasures that they're taking, I think we're setting ourselves up for really relative value opportunities," said Emons.

China's central bank cut its interest rate on medium-term loans earlier this week to alleviate some of the economic pressure caused by the coronavirus. The People's Bank of China also lowered interest rates on reverse repurchase agreements earlier in the month.

Still, Emons says the markets aren't in panic mode even as the spread of the virus keeps investors on edge.

"We know that this is still playing out and we'll see the data coming out this week and earnings data going forward. But I do think that the financial markets in general have viewed this virus outbreak not as a financial crisis but more like an economic challenge and I think the challenge in these countries has been taken head-on," said Emons.

Emons adds that opportunities can be found outside China — he also likes South Korea, Singapore, Australia, New Zealand, Indonesia and the Philippines as top investments.

"With stocks, bonds and currency "relatively undervalued" to the U.S., the average triple return investors can gain is close to 25% (20% stocks, 4% currency and 1% bonds)," he said in an email to "Trading Nation."

Emons believes in a 60-40 global portfolio where the majority is invested in foreign assets and the remaining 40% in U.S. assets.