In our latest CIO Special, 'A promising start for EM equities and a look ahead', we look at the performance by emerging market (EM) equities that has become more optimistic about the potential boost from China's Covid reopening.
We highlight the following:
- EM equities started strongly in January. Strong rally could limit short-term potential – but more favourable macro environment than in 2022 should be supportive going forward.
- Asian markets still have most upside potential within EM equities, especially China. We also like Indian stock markets for their structural growth potential.
- Key risks include deteriorating U.S.-China relations and cautious market sentiment over rate-hike cycle and U.S. inflation.