Emerging Markets Outlook: Dec 2020

Secular Tailwinds and Warning Signs in Emerging Markets

Asian economies have recovered more quickly from this year's crisis than the rest of the world. This is especially evident in China, but also in other economies throughout the Asia-Pacific region. But as we look forward to a new year (and hopefully a better one!), what are the forces that will drive the performance of emerging market equities in 2021? 

Some of these papers cover the large, secular tailwinds that are likely to affect emerging markets over the next several years, while others peer more closely into specific sectors. Additionally, be sure to heed the warning signs: home bias is widespread in some emerging markets, and fraud risk may be more prevalent in others. 

Emerging Markets: Beyond GDP growth (UBS AM, Nov 2020)

In this long-term outlook, UBS Asset Management looks at structural trends and sector-specific drivers that could generate opportunities in emerging markets over the coming decade.

Growth Alpha in Emerging Market Equities (Jennison Associates, 2020)

Jennison Associates describes some of the secular tailwinds that could lead investors towards alpha generation in emerging market equities.

Monetary Policy in Asia: Proactive but with uncertainties (Deloitte, Dec 2020)

Deloitte reviews central bank activity throughout Asia over the course of 2020, providing updates on China, India, Japan, Indonesia, Thailand, Malaysia, and Singapore.

Local Currency EMD Outlook Supported by Macro Backdrop (Eaton Vance, Dec 2020)

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

Though a focus on individual risk factors is critical to the success of investors in EM debt, the macro backdrop remains supportive. The authors also explain why they are particularly keen on local currency debt as we progress into 2021.

Are Asian Equities Set for Change in 2021? (Janus Henderson blog, Dec 2020)

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

Janus Henderson portfolio manager, Andrew Gillan, discusses the dynamics within Asian equity markets, China's recent outperformance, and potential opportunities for 2021.

Technology: One world, two systems (Franklin Templeton, Nov 2020)

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

Global supply chains are facing increased pressure. Nationalism has led to deglobalisation, and the situation has been escalated by the rivalry between the United States and China. This is especially evident in the technology sector.

China 2021 Outlook: Pandemic fueled de-globalization (Franklin Templeton)

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

In this brief 2021 outlook, Franklin Templeton portfolio managers describe China's response to the coronavirus crisis, what this says about Chinese healthcare, and other opportunities for investors in China.

Emerging Market Exchange Rates: Cheap or value traps? (Capital Group, Nov 2020)

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

Are emerging market currencies undervalued at present? In this paper, Capital Group discusses an examination of EM exchange rates using a proprietary model.

China’s good old-fashioned recovery (PineBridge Investments, Dec 2020)

As PineBridge points out, China is leading the global economic recovery. This is partly due to the way they dealt with the virus, but also due to stimulus measures that the Chinese government passed this year.

Home Bias in India: The case for diversification (S&P Dow Jones Indices, 2020)

From 2003 to 2018, investors in Indian securities enjoyed tremendous outperformance. However, recent performance swings in the opposite direction may urge domestic investors to diversify their holdings into more global allocations.

Appraising Home Bias Exposure – Mexico (FTSE Russell, 2020)

Home bias is rampant in examinations of emerging market investors. In this study, FTSE Russell puts Mexican pension funds under the microscope to determine whether their portfolios are disproportionately skewed towards domestic securities.

First In, First Out: APAC to lead a global recovery (PGIM Real Estate, Dec 2020)

The real estate sector is poised for recovery in the Asia Pacific region. Despite the dramatic effects of the coronavirus in the rest of the world, the health crisis in the APAC region has been largely averted, paving the way for recovery in other slow moving sectors such as real estate.

The Outlook for Emerging Market Equities in 2021 (Aviva Investors, Dec 2020)

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

Alistair Way of Aviva Investors believes that there are three themes that will be very relevant for emerging market equities in 2021: stock selection, de-globalisation, and decarbonisation.

Webinar: Asian equities after the coronacrisis (Man Group, Nov 2020)

In this Man Group webinar, the topic of discussion is alpha generation in Asian equity markets. Asia has benefited from the shift towards a more digital economy and the shift towards more durable consumer goods, as evidenced by current account surpluses.

Filtering Out Fraud Risk in Chinese A-Share Markets (Robeco, Nov 2020)

Investors in Chinese equities should beware of fraud risk. Given the recovery and growth story taking place in China, investors are becoming increasingly interested in Chinese A-shares, where fraud is more prevalent than in most developed markets.