HSBC Global Banking and Markets’ Post

The beat goes on for Emerging Markets, according to the 16th edition of the HSBC EM Sentiment Survey. Ali Cakiroglou and Murat Ulgen, from HSBC’s Global Research team, highlight that investors see high interest rates in developed markets as the biggest downside risk and a strong rebound in mainland China as the biggest potential upside. Learn more: https://grp.hsbc/60429CEO6 #HSBCResearch #Research #ThoughtLeadership #EM #EmergingMarkets

The May edition of Schroders Emerging Market Lens is now available. The data and insights covering EM equities and bonds. Some takeaways from this month’s chart packs: 👉 After a weak 2023, consensus expectations are for EM earnings to soar 📈 👉 China equities overtook broad EM year-to-date in April. This has continued in May with the MSCI China now up 12% in USD terms - and the market has rallied 28% from its 2024 low in January (past performance not the future obviously...). 👉 At the individual market level, most EM are cheap versus their own history. 👉 YTD performance in hard currency EMD remains bifurcated. 👉 Where are the cheap valuations in hard currency EMD? 📊 📚 Read more in our comprehensive EM Lens chart packs (link in comments below). 

In this year’s RBC Emerging Markets Equity Outlook 2024 report, we explain why we believe EM equities are at a turning point and potentially starting to decouple from developed markets. Despite the most aggressive US Fed rate hiking cycle in its history, many EM equity and currency markets have performed well this year, while in fixed income, we have already seen EM local government debt outperform DM. Please click here for a summary and information on how to access the full report. https://bit.ly/4aodZIw

Emerging markets bonds are positioned to outperform much of the rest of the fixed income market in 2024.

Schroders Emerging Markets Lens May 2024: your go-to guide to #emerging #markets. Emerging market #equities have picked up recently, aided by a rally in #China. The going has been tougher for #EM debt. We assess the latest valuations. https://okt.to/nO7dN5

📊 Better Risk Data Should Boost Confidence In Emerging Markets According to Financial Times, new figures show that default and recovery rates compare favourably with other debt asset classes. 📎Emerging market businesses have long been perceived as risky destinations for investment. But how risky, exactly? We now have better information with which to answer that question. 🗺The statistics yield clear messages: investment risks in emerging market companies compare favourably with those experienced in other asset classes. Moreover, the portfolio diversification provided by emerging markets gives the most benefit (versus assets with similar default rates) in times of global stress. 📍In debt financing, default rates are a guiding metric for investors, measuring how often a financial obligation is unmet. ✅The IFC’s private sector portfolio had a low average default rate of 4.1% from 1986 to 2023, suggesting the untapped potential and resilience of investments in emerging markets, where more capital is needed. More info: https://lnkd.in/dYuPyHeS

🔔 Schroders Emerging Market Lens Q1 2024 is now available 🔔 Separate equity and debt chartbooks/presentations, packed full of data and insights, to help you navigate the world of emerging markets (EM) 📈 📊 📉 This edition looks at 2023 performance, something of a bittersweet year for EM investors, and assesses the valuation picture for EM assets at the start of 2024. Here are nine key charts from this month’s decks... 1)      EM equities bounced back in 2023 but lagged DM. Divergent US and China performance characterised the year - EM ex China finished ahead of World ex US. 2)      US exceptionalism has dominated for a decade. 3)      EM equities saw further cheapening vs DM last year. The discount to the US increased to 42% on a 12-month forward P/E measure and is now above GFC levels. 4)      Many EM are cheap, but the degree varies 5)      EMD generated robust returns in 2023, led by local debt. 6)      Spread narrowing was greatest in hard currency debt. 7)      Hard currency valuations still slightly cheap versus history, but there is more to this story… 8)      Hard currency EMD issuance was muted versus history 9)      Keep one eye on geopolitical risk... Link to the full deck, packed with EM charts and insights, in the comments below #schroders #emergingmarkets #investingstrategy #EMequities #EMD #currencies

The fixed income landscape in Global Emerging Markets is witnessing significant gains in H1 2024, highlighting resilience despite macroeconomic challenges. The rise of global fixed income ETFs is transforming market dynamics, according to TraX data from MarketAxess. Read more as Anju Sima discusses the recent growth of EM bonds fueled by #ETFs.

🚨Exciting insights from my interview with Dr. Murat Ulgen, Global Head of EM Research at HSBC. We discussed HSBC's latest Emerging Markets Sentiment Survey and the key trends shaping the EM landscape. Here are some highlights: - Investors remain bullish on emerging markets for the next three months, despite moderating risk appetite. - We're seeing a slight rise in cash levels among investors, signaling a more cautious approach. - Asia is the top geographic preference for investors, driven by China's stimulus measures, which are providing much-needed confidence to the EM space. - Expecting smaller rate cuts from the Fed. Anticipating rate cuts at every meeting from the ECB starting in October. - A stronger dollar environment is expected, with a year-end EUR/USD forecast of 1.08. - Investors are focusing on countries with stable and credible economic policies, particularly in South Africa, Turkey, India, and Brazil.

Wondering where our emerging markets debt team is overweight and underweight? Marco Ruijer shares a mid-year update in our latest blog post: https://lnkd.in/g8NVJHZd #ADeeperLook #EmergingMarketsDebt