Why the favourable EM cycle is only just beginning

Stabilisation in India and China

Investors continue to watch US President Trump closely and monitor how his campaign rhetoric around protectionism and anti-globalisation will unfold.

These policy uncertainties, including trade frictions and a stronger US dollar, pose risks to emerging market (EM) assets. However, a policy mix favourable to global growth should not derail momentum.  We see increasing signs that the economic cycle is turning favorable for EMs and we believe we have only just begun this cycle, as typical economic upswings and downturns last five to seven years.  Most major indicators suggest that EM economies have stabilised and bottomed out, including improving current account balances, increased competitiveness on the back of lower real wage growth...