The worst case scenario for emerging market (EM) equities has started to unfold, turning a potentially positive outlook around by 180 degrees.
Since February, as the impact of US President Donald Trump's tax cuts rolled over, the 2019 earnings growth outlook for EM equities surpassed that for US equities. Although by a small margin, this was a relevant sign. Turbulence ahead for emerging markets Historically, earnings expectations for EM versus developed market (DM) equities have been an important driver of relative performance. Supported by a wide valuation gap of close to 30%, the earnings growth crossover called for EM equities' outperformance. The key condition for this to materialise was earnings expectations in...
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