Deep Dive: 'This time is different' for emerging market equities

EM countries dealing with inflation

Elliot Gulliver-Needham
clock • 5 min read
Traditionally, inflation has been a serious problem for emerging markets, but now it is “at least as much a problem” for developed markets too
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Traditionally, inflation has been a serious problem for emerging markets, but now it is “at least as much a problem” for developed markets too

The emerging market equity sector looks promising despite headwinds of slowing Chinese growth and the Russian invasion of Ukraine, according to figures from across the industry.

Fabiana Fedeli, CIO of equity and multi asset at M&G, warned: "The four most dangerous words when investing in emerging markets are ‘this time is different'." Nevertheless, she said "something does look and feel different this year" as EM equities have been more resilient than developed markets compared to previous periods of macroeconomic uncertainty. She noted: "Year to date, the MSCI EM index is down just a sliver behind the S&P 500 index and well ahead of the Stoxx Europe 600 index." The same is true in EM currencies and bonds, which have seen a derating, but not the "blood bat...

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