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The Worst Is Likely Behind for Emerging Markets
Despite a confluence of unprecedented shocks, emerging markets (EM) have shown resilience, with few signs of a broad-based crisis. As an asset class, EM appears to be positioned for stronger performance. High EM real – or inflation-adjusted – rates buffer the spillover risks from further U.S. Federal Reserve (Fed) interest rate hikes and the effects of the strong U.S. dollar. China’s economic reopening provides a tailwind, and the peaks in inflation and fiscal pressures appear to have passed. Structural forces such as deepening local markets and nearshoring support EM fundamentals. The magnitude of last ... (full story)