Thursday, 18 July 2019
The US initiated trade war is causing global trade as well as business and consumer confidence to slow. GDP and earnings growth have been revised downward year to date in Developed as well as Emerging Markets. Indian GDP growth has declined sharply in recent months, no longer in a world leading position. Still though, EM GDP as well as corporate earnings growth are superior to those of DMs. The more subdued economic outlook has made the Fed, the ECB, the BOE as well as the Russian, Indian and other EM central banks shift towards a stance of monetary easing. Global Emerging Markets conventional valuation ratios are still on a large discount to Developed Markets. As EM bond yields fall, the EM equity risk premium has become very attractive relative to its history. We recommend a moderately Overweight position for Global Emerging Market Equities.
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