Are the stars aligning for EM equities?
Paul Jackson. Global Head of Asset Allocation Research and András Vig. Multi Asset Strategist
Given the origin of the Covid-19 virus and the tendency of emerging market (EM) countries to catch a cold when the rest of the world sneezes, it is surprising that EM assets have not performed even worse this year.
Our own index suggests that EM currencies have fallen by 6%-7% in real terms this year (see chart). Along with a widening of spreads, this has led to disappointing returns on EM bonds.
However, EM equities have held their own against many developed market counterparts. We find that this has nothing to do with the stringency of government Covid-19 actions. We think it has more to do with the cheap valuations on offer.
We have long extolled the value offered by EM assets and for the first time in ages this is paired with a belief that oil has bottomed. Are the stars aligning for EM equities?
For our more in-depth assessment click here.
Investment risks
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The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested
Important information
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Data as at 17.05.2020, unless otherwise stated. This document is marketing material and is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.
Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals, they are subject to change without notice and are not to be construed as investment advice.
