EM Outlook: March 2019

Updated Emerging Market Investment Outlooks

In the papers listed below, Lazard makes a distinction between 'old China' and 'new China' companies that's especially relevant for new China A-share investors, as well as other risks and opportunities that exist in this market.  International fixed income investors should be aware that Chinese debt will be added to the Bloomberg Barclays Agg from next month.

But the EM outlook story is not entirely dominated by US-China trade disputes and the Chinese economic outlook.  FTSE Russell provides details about the Indian fixed income market, and State Street Global Advisors suggests that the rise of middle class consumers in emerging markets may provide ample opportunity for diligent active managers to extract alpha. 

Searching for Alpha Consistency in Emerging Market Equities (State Street, 2019)

Urbanization and the rise of the middle class within emerging market economies should continue to increase consumption, providing opportunities to capture alpha amongst active managers, as well as managers that employ a unified China equity strategy.

2019 China Outlook - Time to enter the tiger's den? (Fidelity Intl, 2019)

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

China equities finished 2018 with their fifth worst drawdown in 20 years, while China government bonds were the best performing major government bond market in local currency terms. Both markets appear to be pricing a bleak outlook for Chinese GDP growth and corporate profits for the year ahead, but how bad is it?

China Joins the Global Aggregate: A Practical Guide For Investors (AB, Feb 2019)

For compliance reasons, this paper is only accessible in North America and South America

The authors address the benefits and risks associated with Chinese government bonds, as China is set to join the Bloomberg Barclays Global Agg in Q2 2019.

Parametric 2019 emerging markets outlook: The case for optimism (Eaton Vance, 2019)

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

Despite the global sell-off in 2018 in EM equities (and full-blown crises in some countries), Eaton Vance makes the optimist's case for emerging market equities in 2019.

Asian bond markets reach a tipping point (Manulife AM, Feb 2019)

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

Asian bonds may be propelled into global prominence in 2019, due to the inclusion of Chinese debt in global bond indices, as well as relatively high yields and low correlations to other bond markets.

The China A-Share Equity Market and Foreign Investors (Lazard, 2019)

Lazard delves into the Chinese A-share market, describing the differences between 'Old China' or 'New China' companies, and other issues that may allow investors to more properly balance the risks and rewards inherent in this market.

The Long View: China is Too Big to Fail (Fidante, Feb 2019)

Fidante Partners looks into the Chinese economic slowdown and the long-term imbalances that presently exist within China. Actual economic growth may be as much as 1.5% below officially reported numbers.

Five-Year Capital Market Outlook — 2019 Asia (Willis Towers Watson)

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

This report by Willis Towers Watson examines the five-year capital market outlook for Asia - the challenges and opportunities.

Emerging Markets Charts & Views: H1 2019 (Amundi AM)

Some valuation gaps have already been partially closed in emerging markets, due to strong returns in early 2019, but opportunities still exist in EM equities, as well as local and hard currency debt.

The Future is Asian: an interview with Parag Khanna (Aviva Investors, Feb 2019)

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

AIQ interviews Parag Khanna, author of 'The Future is Asian: Commerce, Conflict & Culture in the 21st Century,' about the beginnings of a multi-polar world dominated by Asian growth (not just Chinese growth).

The Indian fixed income market (FTSE Russell, 2019)

Given its rapidly growing working-age population and its expanding economy, India can be viewed as an attractive place to do business. This paper examines the INR-denominated Indian bond markets and opportunities for foreign investors.

ASEAN Outlook: Slower Momentum (Moody's, Feb 2019)

Moody's describes GDP growth trends, projecting that despite above average growth in 2017 and 2018, Southeast Asia's pace of growth will slow down in 2019.

Emerging Markets: Why the Glass is Likely Two-Thirds Full (PineBridge, Feb 2019)

Should China's growth stage a comeback, and should the US Federal Reserve remain reasonable, emerging markets could be the first to benefit.

The U.S.-China Trade Dispute: A Macro Perspective (ANU, 2019)

The authors utilise a rigorous macroeconomic model to determine the potential economic implications of the trade conflict between the US and China.

Emerging Markets: A Better Deal for Growth (Goldman Sachs AM, 2019)

Analysts at Goldman Sachs AM examine the outlook for emerging markets. EM assets had a pull back in 2018 due to political risk and trade tensions, but are investor concerns overdone for this asset class?

China: Economy promises growth despite headwinds (Deloitte, Mar 2019)

Deloitte describes how growth is back in the cards in China after a seemingly sluggish 2018. But this depends on the outcome of trade conflicts, as well as the PBOC's ability to manage renminbi exchange rates.