International - Market Stories - EM Outlook 2024 Chart and Views

Navigating Emerging Markets Through the Ballot Boxes

Against the backdrop of a crowded and potentially pivotal year for global elections, what will be the impact and will they open a door to emerging markets for investors in search of higher growth potential and diversification?

Geopolitics in an election-heavy year

2024 will see 40 countries going into national elections, representing over 40% of the global population (around half of the world if we also consider European parliament elections).

The outcomes of these elections could affect the future economic path, and international relations, of established leaders such as US/Europe and of emerging powers for instance in Asia and Latin America.

Increasingly, internal politics in emerging powers such as China, India, and Latin America will shape global geopolitics. In our view, investors looking for higher returns in emerging markets should assess country-specific factors such as political stability, public finances and economic growth.

Opportunities in a fragmented world

We are optimistic about the prospects for emerging markets in 2024. Following the rally in 2023, investors seeking opportunities should consider turning their attention to emerging regions, leveraging on their growth advantage and robust local consumption and trade dynamic.

The current outlook for the asset class is increasingly favourable, with certain emerging economies strategically positioned for growth. Projections indicate that the growth premium favouring emerging markets over developed markets is expected to expand further.

Key themes to keep an eye on

A source of income with appealing yields

The current yield profile of emerging markets hard currency bonds is now more appealing than in previous years. In light of a potential dovish interest rate shift by the Fed, we maintain a positive stance on emerging markets bonds and currencies, with a selective approach and focusing on countries that have been successful in anchoring inflation and are well-positioned in the easing cycle.

International - Market Stories - EM Outlook 2024 Chart and Views - Fixed Income

Room for optimism in 2024

We are positive on the asset class, driven by several supportive factors. The growth premium is increasingly favouring emerging markets over developed markets, the capex cycle is expected to tilt in favour of emerging markets, valuations remain attractive both in absolute and relative terms, and there is a positive trajectory in the earnings cycle.

International - Market Stories - EM Outlook 2024 Chart and Views - Equity

A growing theme for Emerging Markets

Increasing investor demand for green, social and sustainability-linked bonds could help achieve a green transition in emerging markets and low-income countries. In these regions, where the impacts of climate change are particularly pronounced, the growing sustainable bond market is becoming increasingly vital for their economic development.

Emerging Markets Fixed Income A source of income with appealing yields

A source of income with appealing yields

Emerging Markets Equity Room for optimism in 2024

Room for optimism in 2024