Zusammenfassung
Emerging Markets, particularly India, are playing a crucial role in driving the global economic recovery in 2024 due to their resilience.
Emerging markets outlook for the second half of 2024
Emerging Markets (EM) are playing a crucial role in driving the global economic recovery in 2024. We see three themes playing out:
1. Resilient, but not robust Emerging Market economic cycle
2. Fed's impact on Emerging Market Central Banks
3. Prudent fiscal approach
Focus on China and India
- China growth: a dual-track recovery
China's economic growth in Q1 outpaced expectations, growing 5.3% YoY. The recovery has been uneven, with net exports contributing significantly more to GDP in Q1 compared to 2023 (+1.4 percentage points), while the boost from investment and consumption declined (-1.3pp).
- India robust economic momentum to continue
India's economic growth performance continues to be well sustained. Domestic demand is the driver and investments should remain robust even in the second half of the year. A more broadly constructive outlook for consumption is likely to come on the back of some marginally larger support for households.
EM directions for the second half of 2024
Equities
EM equities are favoured amid the recovering earnings growth in the second half of the year.
We are positive on EM equities driven by the strong demand and economic growth.
Bonds
EM bonds offer attractive yields. Overall, we are positive across the board.
The higher-for-longer rates narrative from the Fed is putting some pressure on EM debt, but we remain positive with a selective mindset.
Currencies
While a Fed move to cut rates will evenutally support EM currencies, for the time being we remain more neutal, as the higher-for-longer environment is supportive for the USD.
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