CoreMacro | Emerging Markets

Special Report

China's anti-involution policies will not end deflation or boost corporate profits on a sustainable basis. Authorities will be reluctant to cut industrial capacity as doing so would lead to layoffs. Consequently, production will continue to exceed demand, and price deflation will persist.

President Javier Milei’s electoral win has massively outperformed expectations. Meaningful legislative support and renewed market confidence will revitalize his liberalizing economic program. Our recommendation not to sell Argentine assets following the post-Buenos Aires election carnage has been validated.

Special Report

Investors should not count on buoyant growth in the ASEAN and Indian economies because of manufacturing relocation away from China in the next couple of years.

In global markets, speculative forces have intertwined with the sound fundamentals of specific equity segments, perplexing investors. This report aims to distinguish between excessive price run-ups and healthy fundamentals.

Special Report

With Sino-US tensions flaring up again, will Chinese manufacturers accelerate their overseas capacity shift? In this Special Report we examine China’s manufacturing offshoring through multiple lenses and tackle the key questions shaping its next phase.

The belief that net portfolio outflows out of the US will fuel EM assets is a common but misguided narrative. If the US starts experiencing net capital outflows, it would need to run a current account surplus. A shift in the US current account from deficit to surplus would be devastating for the global economy in general and EM in particular.

Chilean equities are undergoing a structural re-rating. A political swing back to a pro-business administration, a benign macro backdrop, and a resilient exchange rate will drive Chilean markets’ outperformance versus EM peers.

Special Report

China’s policy-driven constraints prevent the “destruction” part of the creative destruction process. Instead, they entrench overcapacity, deflation, and poor profitability. We are reluctant to chase the rally in Chinese stocks in absolute terms.

Indonesia’s policy easing will boost domestic demand, but fuel inflation. Current account deficit will widen, and the rupiah will weaken. Stay short the rupiah and go underweight Indonesian stocks, domestic bonds, and sovereign credit in their respective EM portfolios.

Core Europe’s industrial sector will relapse in the coming months due to US tariffs and a strong euro. Investors can play the imminent deflationary shock by being long Central European bonds. They should, however, hedge the currency risk vis-à-vis the euro.