4/2/2023 0 Comments Em client update![]() ![]() The timing of that thesis looks a little weak at the moment, but we're sticking to our guns, saying that we're still going to have a choppy market environment. So, the thesis that EM outperforms during 2023 remains very much intact. So, we have a very different cycle playing out in emerging markets on the fundamental side, and valuations are still extremely attractive. China, which is leading the outperformance so far in EM equities, did not do any monetary policy easing during COVID, and did not do any aggressive monetary policy tightening in 2022 either. I'm very confident that even if we do get a change in the environment from bullish to a bearish, EM assets are still likely to outperform, because EMs have had a very different time in terms of monetary policy. What I fear is that at some point, lower rates will come because of a recession this year, and that's when you can have interest rates declining but where risk assets are not trading in a choppy manner. And equity managers are basically using a lower discount rate and bringing a higher net present value. So, we are in a bit of a constructive model where yields have declined quite significantly from their peak. It's interesting that despite the fact that China is reopening, energy markets are not catching a beating, one of the reasons why inflation remained relatively low. In a way, it's very hard for us not to see a recession given what's happening in the labour market, and how aggressively inverted the yield curve remains in terms of the United States, and given the signs that we're getting from other markets. It's not playing out so far, but I think it still stands. Now, my view and my thesis is that we're still going to have a choppy environment. We have the S&P up 7.4% and trading close to 4,200 levels. This has continued even after the Fed, European Central Bank (ECB) and the Bank of England (BOE) announced their monetary policy changes in February. It obviously doesn't feel like that considering the massive rally year-to-date. The other part of the thesis of the year of two halves is obviously the first half of the year would be choppy. Our thesis that EM is likely to outperform on the back of better GDP growth performance is playing out quite nicely. I think that's a very interesting beginning to the year. ![]() That is driving the MSCI EM index, or Emerging Markets (EM) stocks in general, to outperform globally – to outperform the S&P 500 and also to outperform broader markets, European stocks, for example. ![]() As mentioned in my weekly research two weeks ago, the thesis we put out at the beginning of December last year (of a year of two halves), is holding, particularly the second geographical connotation, with China bouncing up and growth accelerating in they reopen their economy, while the western world is still going through a recessionary process related to the very strong tightening of monetary policy after the US Federal Reserve (Fed) policy of higher interest rates.īut if you look at the performance year-to-date, it's no surprise that with China reopening its economy even earlier than we expected when we published our research – and much earlier than most sell-side research expected –, Chinese stocks are actually outperforming quite significantly. Gustavo Medeiros: Well, first, thank you for hosting the first "EM in 10" of the year. Question one, Gus: obviously with quite an impressive January in terms of performance and a continuation of a rally that we saw in both November and December, what are your views and what are you thinking as we've just finished up the month of January? Lots of news coming out of the first month of the year here in January, so let's get right to it. Thank you for joining the Ashmore "EM in 10" with Global Head of Research, Gustavo Medeiros. I'm part of the Ashmore New York based client facing team. ![]() Stephen Rudman: Good day, this is Stephen Rudman. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |