The Emerging Markets Outlook in the Year of the Metal Ox
Top Papers on the Outlook for EM Debt and Equity
The Spring Festival (a.k.a. the Chinese New Year) is upon us, and as per the Chinese calendar, it is now time to collectively say "good riddance" to the Year of the Rat and to the pestilence that 2020 brought with it. 2021 is the Year of the Metal Ox, which is known instead to usher in prosperity, career advancement, and success.
Many Asian countries are already off to a great start, as a resurgence in manufacturing and other economic fundamentals bode well for the Asian economic recovery story. Additionally, a weaker dollar would be a boon for EM local currency debt investors. Find out more about these, and other trends within EM debt and EM equity markets within the following set of emerging market outlook white papers.
Rethinking Value Investing in Emerging Markets (RBC GAM, Feb 2021)
For compliance reasons, this paper is only accessible in the United States and Canada
The authors highlight the extreme degree of divergence between growth and value over the past decade. This is a trend that is evident in both emerging and developed markets. A significant portion of the returns to EM growth over the course of 2020 was due to multiple expansion.
Income Generator: Navigating a weak US dollar (Wells Fargo AM, Jan 2021)
For compliance reasons, this paper is only accessible in certain geographies
Given the decline in the U.S. dollar during 2020, and further expected weakening in 2021, Wells Fargo Asset Management recommends that global multi-asset investors include (or add to their) non-dollar-denominated assets.
The Perks and Perils of a Weak US Dollar (WisdomTree Investments, Feb 2021)
For compliance reasons, this paper is only accessible in the UK & Europe
In light of projected U.S. dollar weakness, WisdomTree Investments suggests looking towards emerging market equities and commodities, as these two asset classes are likely to benefit from a declining dollar environment.
Emerging Markets Debt 2021 Outlook (Capital Group, Feb 2021)
For compliance reasons, this paper is only accessible in the UK & Europe
Capital Group discusses their positive outlook for emerging market debt in 2021, which is supported by expected upticks in commodity exports, continued monetary policy stimulus measures, and a recovery in the manufacturing sector.
The Quick Brown Ox Jumps Over the Lazy Rat (Qontigo, Feb 2021)
Qontigo's sentiment gauges indicate a significant decline over the past two months, yet indices such as the STOXX APAC 600 ex-Japan have continued to rise. The authors also provide a factor-based decomposition of returns for this index.
Navigating Markets in the Year of the Ox (Franklin Templeton, Feb 2021)
For compliance reasons, this paper is only accessible in the EMEA region
Portfolio managers from Franklin Templeton cover the outlook for emerging markets in this brief article. They remain positive on Chinese equities and EM local-currency debt.
Drivers of the Shanghai-London Gold Discount (World Gold Council, Feb 2021)
For compliance reasons, this paper is only accessible in certain geographies
World Gold Council discusses the characteristics of the gold market in Asia and the differences between this market and the rest of the world, as exemplified by the Shanghai-London gold price discount.
2021 China Market Outlook (T. Rowe Price)
For compliance reasons, this paper is only accessible in certain geographies
Expectations of a consumer-led recovery in 2021 are fuelling the positive outlook for Chinese equities this year. Sectors such as automobile sales have already started to recover and represent an increase in Chinese consumer confidence.
EM Equities: China puts pressure on Alibaba (Aviva Investors, Feb 2021)
For compliance reasons, this paper is only accessible in certain geographies
Public comments from Jack Ma in late 2020 may have elicited an extreme response from Chinese regulatory authorities, who later cancelled the IPO of Ant Financial and began investigating Alibaba over antitrust issues. But what are the implications of this for the rest of the Chinese technology sector?
China Walks Policy Tightrope Between Growth and Risks (HSBC AM, Feb 2021)
For compliance reasons, this paper is only accessible in certain geographies
HSBC Asset Management reports on the tightening of liquidity conditions in China during the month of January. Chinese monetary policy is expected to normalise in 2021 as the PBoC tapers emergency support measures, whilst still keeping a close eye on money supply growth.
Asia Equities: Three trends driving optimism (PineBridge Investments, Feb 2021)
Retail investors have been flocking to equity markets in Asia, earnings estimates have been upgraded across multiple sectors, and industrial demand is on the rise. PineBridge Investments reports on these three trends and their implications for Asian equities.
China Decarbonization: The emergence of a mega-theme (Janus Henderson, 2021)
For compliance reasons, this paper is only accessible in the United States and Canada
Decarbonization in China would be a huge accomplishment. Janus Henderson discusses the pledge made by Chinese President Xi Jinping to achieve carbon neutrality by 2060, and other efforts to address climate change risk head-on.
China Outlook: Starting off the year on the right foot (Robeco, Jan 2021)
China's economic recovery is gaining momentum in 2021, as consumer confidence, consumption, and the manufacturing industry are all on the rise.
APAC Outlook: Domestic, digitalisation, diversification (BNP Paribas, Feb 2021)
The authors review Asian equity returns in 2020, before discussing some of the structural changes taking place in these markets and other factors supporting their positive outlook for this asset class.
EM Fixed Income: As good as it gets? (UBS AM, Jan 2021)
UBS Asset Management reviews EM fixed income performance during Q4 2020, noting that the outlook for EM rates and EM credit has improved, given the U.S. election results.
Sustainable Investing Opportunities in Asian Fixed Income (Manulife IM, 2021)
For compliance reasons, this paper is only accessible in certain geographies
Pledges to achieve net-zero emissions targets have recently been made by several Asian countries, including China, Japan, and South Korea. Additionally, banks have committed to not fund coal-based projects. Manulife Investment Management discusses how an improvement in sustainability measures such as these may affect Asian fixed income markets.
Asian Debt Outlook: Strong rebound amid vaccine rollout (NN IP, Feb 2021)
NN Investment Partners provides this addendum to their recently released EMD Outlook, projecting a continued rebound (and tightening spreads) for Asian debt. They remain especially optimistic about the Chinese property sector.
Chinese Gov't Bonds: A HY market in a low yield world (FTSE Russell, Feb 2021)
In this brief article, FTSE Russell notes that the yields on Chinese government bonds remain high compared to their G7 counterparts.
The Internationalisation of the China Corporate Bond Market (ICMA, 2021)
This report from ICMA focuses on the challenges and opportunities present within the China corporate bond market. It discusses recent reforms, as well as the effects of China's phased inclusion in bond indices.
China's Food Future (EIU, 2021)
This report presents information about China's food supply chain and the efforts that are being made to modernise and adopt best practices.
