Live at the Sub-ICs


The health of developed market (DM) economies is in doubt with bank profitability stresses highlighting the impact of tight financial conditions on the real economy. This is prompting some to question whether enough downside risk is priced in DM equity markets. While Emerging Markets (EM) are not immune to this external backdrop, they are much more advanced in their monetary tightening path and
their economies are benefitting from strong domestic growth drivers.

EM stock markets also trade pro-cyclically meaning they have already seen their price multiples derated and their earnings expectations revised to prudent levels, reflecting global concerns.

This dichotomy, with EM and DM currently appearing in ‘different chapters’ of the cycle, is challenging Ashmore’s equity investors to consider whether now is the time to be adding exposure to an industry that is inherently cyclical?

The semiconductor industry stands out to us as a research priority due to the idiosyncratic nature of its many cycle drivers, as well as its role at the centre of a seemingly increasingly multi-polar world. This paper brings readers into the Sub-IC discussion underpinned by a series of questions.