Emerging Markets

MacroQuant is tactically overweight equities, favors an above-benchmark duration stance in fixed-income portfolios, remains bearish on the US dollar, and is bullish on gold and copper.

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.

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. 

Our Portfolio Allocation Summary for October 2025.

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. 

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.