Emerging Markets have performed relatively strongly versus Developed markets during the crisis. This surprised most risk-off investors for several reasons.
Resilience From Experience
Whilst Emerging markets have underperformed the S&P 500 year to date, the difference has only been marginal. Which is not what many investors expected.
In times of crises, risk-off sentiment usually drives investors away from Emerging Markets and towards 'safe-haven' developed markets, government bonds and gold.
On this occasion, many emerging markets have proved resilient against a challenging backdrop, especially given the headwinds coming from the US: A strengthening US dollar, US Yield Curve inversion, soaring 30-year mortgage rates impacting the housing market, and tighter fiscal policy squeezing consumers. And the tensions between the U.S and China, which has not been helped by Xi Jingping's stance on the Russia-Ukraine situation.
So what is driving Emerging Markets resilience, and specifically, which countries are potential beneficiaries of the current market dynamics?
Emerging Market Equity
Will Indian Stocks Continue to Outperform Most of the World?
Indian Stock Market becomes the China + 1
India Equity or China Equity?
Investor Views Are Changing
Dispersion in Emerging Market Equities
Country Selection Now Key
India was one of the best-performing emerging markets in 2021. Yet YTD 2022 the picture has reversed with net foreign capital outflows and significant selling. But is this all about crude & commodities or is the long term structural investment thesis still valid?
View all India Equity portfolio manager views inside RFPnetworks.