Amid change at 1600 Pennsylvania Ave., emerging markets equities could be back in style, a scenario that bodes well for active managers.
Broadly speaking, emerging markets equities are flailing again this year, but emerging markets equities could be back in vogue with newfound regime changes in the U.S.
JPMorgan’s Diana Amoa “said developing-nation debt will benefit should Joe Biden win the presidency and Republicans control the Senate. The prospect of less fiscal stimulus suggests lower rates for longer and an extended period of dollar weakness, luring more investors into the asset class, she said,” reports Ben Bartenstein for Bloomberg.
Emerging markets investors are once again back as world economies begin the recovery process from Covid-19, but they’re not simply throwing darts at a board. EM investors are exercising more due diligence and thus, are more picky with their investments.
An Uneven Recovery?
One thing to think about before EM investors decide to jump in is the uneven recovery. While China is leading the way after rebounding from the effects of Covid-19, some countries are left in the rearview mirror. That speaks to the advantages of active management because active managers don’t have to adhere to the geographic constraints set forth by a passive index,
“Once the U.S. election is resolved, Amoa said emerging-market investors will be focused on two things: The virus and the vaccine. Any positive developments there would bolster risk sentiment further. For now, she finds the rebound in purchasing manager indexes across the developing world encouraging,” according to Bloomberg.
Emerging markets investors are once again back as world economies begin the recovery process from Covid-19, but they’re not simply throwing darts at a board. EM investors are exercising more due diligence and thus, are more picky with their investments.
“Emerging-market assets are in a ‘sweet spot’ in the months ahead thanks to low global rates, a weaker dollar and a potentially less confrontational U.S. president, according to JPMorgan Chase & Co.,” notes Bloomberg.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.
