Commentary

Four Mega-Trends Shaping the 2022 Outlook and Beyond

The global macro environment is ripe for EM assets outperformance as a combination of stronger growth in China, the end of exceptionalism in the US and less uncertainty on US interest rates, lead to a strong backdrop for EM assets.

Commentary

A Consolidation Path for Chinese Property

Chinese property markets are going through a significant slowdown that began in Q2 2021. The average slowdown in the previous episodes over the last 20 years lasted four quarters.

Commentary

Living With Inflation: A New Macroeconomic Regime

The fiscal and monetary policy responses to the Covid-19 shock aided demand and allowed for a v-shaped economic recovery starting in 2020. Further fiscal stimulus boosting demand in 2021 were met with supply shocks, bringing US and EU inflation to the highest levels since 2008. Emerging Markets (EM) experienced some inflationary pressures, albeit much more modest than Developed Markets (DM).

Commentary

China’s new development strategy: greener, less unequal, more sustainable

The country’s leadership has designed a new development model, based on a ‘common prosperity’ philosophy, aimed at modernising the economy by improving the country’s future demographic profile via lowering inequality and promoting sustainable, even if slower, GDP growth which is both less dependent on financial leverage and in harmony with nature.

Commentary

Measuring EM Stocks’ Undervaluation

What is the degree of Emerging Markets (EM) stocks’ undervaluation relative to United States (US) equities?

Commentary

Opportunities In Local Currency Assets After The Sharp Dollar Move

The Fed meeting last week led to higher asset price volatility across asset classes.

Commentary

US Inflation Unlikely to Pose a Serious Threat to EM

Inflation is likely to remain high in 2021. The primary source of price pressures is the rebound in commodity prices after their sharp collapse last year.

Commentary

Seven Policy Proposals to Meet the Paris Agreement Objectives

The 2015 Paris Agreement introduced the legally binding goal of maintaining the average global temperature below the pre-industrial revolution average plus 2o Celsius in order to avoid severe stress on natural and socioeconomic systems.

Commentary

EM Is No Longer a Commodity Play

The Emerging Markets (EM) asset class is often labelled a commodity play for investment purposes. The argument is simple and directional; EM countries export commodities, so rising commodity prices are good for the asset class, whereas falling commodity prices hurt EM countries.

Commentary

Equity Outlook 2021: Emerging Markets

2020 will live long in memory, and so it should. EM have navigated, and in some cases excelled, during the most challenging stress test in recent history. The crisis will ultimately prove temporary, in our opinion, and 2021 is well placed to be a year of recovery.

Commentary

2021 Outlook: Seven Themes for a Post-Vaccine World

Science is winning the battle against the covid-19 coronavirus. The advance in therapies has already contributed to a significant reduction in hospitalisation and fatality rates vis-à-vis the number of cases, while the multiple of approved and soon to be approved vaccines puts the livelihoods of billions of people on track to normalise in 2021.

Commentary

US Elections and EM

Noise levels are likely to remain elevated in the run-up to – and possibly in the immediate aftermath of the upcoming US presidential election, but the post-election outlook should prove positive for EM assets by ushering in a period of more positive risk-sentiment, a long period of low US rates and a lower Dollar.

Commentary

The Case for EM Investment Grade USD Bonds

Overall, EM IG bonds represent a great opportunity for investors seeking to monetise the EM risk premium with moderate volatility in a world, where higher yielding IG-rated securities are increasingly difficult to come by.

Commentary

The EM Fixed Income Universe

Welcome to the 9th annual review of the Emerging Markets (EM) fixed income asset class. Using new data from the Bank of International Settlements and other sources, we establish that the EM bond market has expanded by 12% in Dollar terms in the past twelve months to a size of USD 29.6trn, or 25% of the global fixed income universe as of the end of 2019.

Commentary

Is 9 Times More Yield Enough for You?

Does 9 times higher yield in EM than in US bonds make for an attractive investment proposition? We lay out the arguments.