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EM Outlook: July 2019

Emerging Markets Investment Outlooks

In the first paper below, MFS discusses the intricacies of equity investing in emerging markets. Having considered the wide dispersion of returns in EM, the authors recommend an approach that centers around active risk budgeting and a combination of fundamental and quantitative analysis. 

We've also supplied several papers that discuss the overall outlook for emerging markets, as well as special topics that are relevant to the EM asset class, such as China's belt and road initiative, an update on corporate defaults in China, and a discussion of the potential implications of the African free-trade agreement that was signed earlier this year.  

EM outlook july

A Multidisciplinary Approach to Emerging Market Equity (MFS, 2019)

This 7-page report by MFS Investment Management details how to take a multidisciplinary approach to investing in emerging market equities.

Capturing the Asian century: tapping into Asia’s growth (Manulife IM, Jun 2019)

For compliance reasons, this paper is only accessible in the EMEA region

This paper by Manulife Investment Management takes a closer look at the economic fundamentals that underpin Asia's growth prospects, as well as key developments that have made the region more accessible and appealing to global investors.

Ian Bremmer on politics, trade and technology in EMs (Aviva Investors, Jul 2019)

For compliance reasons, this paper is only accessible in certain geographies

Ian Bremmer, founder of Eurasia Group, is interviewed by Aviva about some of the long-term, seismic trends within India, China, and other emerging market economies.

Structural change in emerging markets: 4 key forces to understand (Wellington Management, 2019)

Focusing on long term economic development may lead one to better translate the various impacts of structural changes in EM to actionable investment themes.

Emerging Markets: Vulnerability and Contagion Risks (Amundi AM, 2019)

For compliance reasons, this paper is NOT accessible in the United States

This Amundi paper anslyzes contagion within emerging markets, looking at nine historical instances over the past 40 years and drawing parallels between them.

EM outlook: Look beyond trade tensions for sustainable growth trends (Capital Group, Jul 2019)

For compliance reasons, this paper is only accessible in the UK & Europe

In emerging markets, corporate fundamentals drive returns more than industry trends or the broader macroeconomic environment. This article focuses on Chinese equities and China's role within the EM universe.

A Perspective on the Current Stability of Global Equity Markets (Intech, Jul 2019)

For compliance reasons, this paper is only accessible in certain geographies

Intech's Equity Market Stress Monitor has recently suggested caution for global equity investors. The authors point towards a reduction in systematic risk via low beta exposure.

The Belt and Road Initiative – Six Years On (Moody’s, Jun 2019)

Moody's analyzes how impactful some of the 'belt-and-road' investments could be for Southeast Asian countries, using one of their macroeconomic models.

Banning Huawei: an act of economic war (Hermes IM, Jun 2019)

For compliance reasons, this paper is NOT accessible in the United States

The blacklisting of Huawei by the Trump administration has put the company's future at risk, effectively cutting it off from its US suppliers. Is this decision a security essential, a negotiating tactic, or an act of economic war? What other implications might it have?

China’s corporate defaults at record high – at last! (VoxEU, 2019)

Corporate defaults in China have been rare, but are starting to occur more often. The vast majority of Chinese corporate bonds are issued by SOEs. This article suggests that credit spreads rather than ratings should be used in China to gauge credit risk.

How Africa's free-trade zone will provide an economic boom (WEF blog, Jul 2019)

This World Economic Forum article examines some of the possible outcomes that could arise from the new African free-trade zone that was created in March of this year. 

GCC enter the EM club (Pictet AM blog, Jun 2019)

Pictet Asset Management describes the implications of oil-rich GCC nations being included within some of the top EM sovereign bond indices.

ESG in Asia

ESG Data in China: Recommendations for Primary ESG Indicators (UN PRI, 2019)

This report from UN PRI provides recommendations to Chinese regulators for their ESG disclosures, so that they can be raised to a higher standard for the international investment community.

A study of asset-owner priorities for ESG investing in Asia (The Economist, 2019)

A large portion of the world's top 100 global asset owners are headquartered in Asia, including half of the top 20 largest funds. This paper details some ESG-related priorities for Asian asset owners.