Thursday, October 19th, 2017

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Professional Investors Pick Emerging Markets

Investors are parking money in China, a survey shows.Institutional investors poured money into emerging markets in October, a new Bank of America/Merrill Lynch survey shows.

According to the poll – which involved 194 fund managers and was conducted earlier this month – 49 percent of professional investors are overweight emerging-market stocks. (An investor who is "overweight" something is more heavily invested in that asset than others.) In September, just 32 percent of fund managers were overweight emerging-market equities.

China, in particular, is currying investors' favor. Nineteen percent of the respondents to the BofA survey say the Chinese economy will strengthen in the coming year, up 38 percentage points from August.

Indeed, China's government moved this week to raise interest rates. Interest rate hikes are a sign policymakers are confident in the strength of a country's economy, so China's rate increase is a good sign for investors who are bullish on the country.

Young investors may be smart to park money in emerging-market stocks or funds. If China and other emerging economies grow robustly in the coming year, those investments could pay off big time.

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