By Morgan Harting, Marco Santamaria
After a strong stretch for emerging markets so far in 2016, some investors wonder whether the rally still has legs. Although stock valuations have risen, we think signs point to yes.
Year to date through September, the MSCI Emerging Markets Index returned 16.4%. That showing outpaced the 6.1% gain of the MSCI World Index and the 7.8% gain of the S&P 500 Index. Although there are risks, we believe the emerging-market ((EM)) rally could continue with improving opportunities, driven in part by Chinese monetary stimulus, and supported by stabilization in commodity prices, continued growth in the US and firming exports from EM economies.
What are some of the risks on the horizon? They include another possible US Federal Reserve rate hike, a presidential election with global trade as a major issue, and simmering geopolitical tensions involving Russia and China.
It's understandable that some investors might…