By: George Bicher & Laura Ostrander
After several tumultuous months, emerging equity markets are rebounding – but there are still plenty of opportunities to uncover and risks to watch. Despite the turmoil, we’ve managed to find paths to outperformance during this period. As we look forward to the coming weeks and months, we’d like to share seven key points about emerging markets (EM) that are shaping our own EM equities portfolio right now.
1. Improvement in Purchasing Managers Indexes suggests that the depth of the contraction has been defined.
Uncertainty remains regarding the strength and durability of the rebound, but the fact that the conversation has turned to improvement is, in itself, a positive. This has given us greater confidence to add some back to our bank names, a sector we downsized going into the COVID-19 crisis. Asset-quality risks in the banking sector are severe, but they appear to be more than priced in at this stage. In addition, we’ve trimmed select China consumption names to manage position size on strong performance.
Originally Posted on June 24, 2020 – Seven Things to Know Right Now About Emerging Markets Equities
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