Emerging market currencies and equities could end up being the surprise best performing sector in 2016 if, as expected, US interest rate hikes are few and far between according to investment house, Regency Associates.

Emerging markets have had a tough year with currencies like the Malaysian ringgit and the Russian ruble among the worst performing globally and Latin American countries Venezuela and Brazil battling severe recessions but much of the worst expectations are already factored into equities and currencies.

“The rising US dollar has wrought havoc on almost every emerging market currency, stock market and commodity this year,” said Shem Orbison, Regency Associates’ chief economist. “We’re confident that that trend will reverse in 2016 and, while we don’t think it’ll be a sharp and sudden change in fortunes for the greenback, we do believe there’ll be a gradual return to the EM trade,” he continued.

“We think there’s a surprise on the way from the US economy and we definitely think that this rate hike, if it comes at all, will be the only one because everything is pointing to an eventual US recession. The Fed simply can’t allow that to happen,” Orbison said.

Regency Associates says it is positioning clients in Chinese technology and financial shares and that it remains bullish on Vietnamese real estate stocks. It warns investors to take profits on US equities that have performed well warning that, even with a dovish statement from the Federal Reserve’s meeting this week, valuations are still rather high.

About Regency Associates
When you make the decision to invest for better returns, you naturally want to make sure that your encounter with the markets is a long and prosperous affair. To achieve the former, you need to seek advice from those with a consistent record of success in securing gains for investors. In a bull market, anyone can make money but it is when the roar of the bear resonates through the world's bourses that superior investment firms like Regency Associates stand head-and-shoulders above the rest.