Investors Seek Shelter in Emerging Markets as Recession Risk Hits US

Investors are planning to ramp up bets in emerging markets, according to the latest Markets Live Pulse survey — a sign the asset class is becoming a favorite for those wary of a US recession.

Some 61% of the 234 money managers, analysts, and traders surveyed said they expect to increase exposure to developing assets in the next 12 months, even as concern mounts about a potential downturn and the Federal Reserve’s path ahead. The asset class, they say, stands to offer shelter if the central bank’s fight against inflation tips the US into a recession.

“Economies in the developing world are far more resilient places today than they were 30 years ago, and EM central banks have been largely more responsible in dealing with the rise in inflation than the developed world has been,” said Justin Leverenz, who manages the $26 billion Invesco Developing Markets Fund, one of the world’s best-performing major emerging-equity fund this year.

“There is significant value across the emerging-market landscape,” he said. “Over the last 10 years, not only have EM economies become more resilient, they have been almost entirely neglected by global investors.”

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